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


For the quarterly period ended September 30, 2017March 31, 2024
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
EXCHANGE ACT OF 1934


For the transition period from __________ to __________


Commission File Number: 0-25965

ZD_Blue.jpg
j2 GLOBAL,ZIFF DAVIS, INC.
(Exact name of registrant as specified in its charter)
Delaware47-1053457
Delaware47-1053457
(State or other jurisdiction(I.R.S. Employer
of incorporation or organization)Identification No.)
6922 Hollywood Boulevard, Suite 500
Los Angeles, California 90028114 5th Avenue New York, New York 10011
(Address of principal executive offices) (Zip code)
(323) 860-9200
(
Registrant’s telephone number, including area code)code: (212) 503-3500
Former name, former address and former fiscal year, if changed since last report: Not Applicable

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 value
ZDThe Nasdaq Stock Market LLC

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


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


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


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


AsThere were 46,128,097 shares outstanding of November 6, 2017, the registrant had 48,408,852 shares ofRegistrant’s common stock outstanding.
as of May 3, 2024.






j2 GLOBAL,ZIFF DAVIS, INC. AND SUBSIDIARIES
QUARTERLY REPORT
FOR THE QUARTER ENDED SEPTEMBER 30, 2017MARCH 31, 2024


INDEX
PAGE
PAGE
3
4
5
6
7
78
3228
4538
4639
4740
4740
4740
4840
4840
4841
Item 6.  
41
4942



-2-


PART I.  FINANCIAL INFORMATION
Item 1.Financial Statements
Item 1.Financial Statements
j2 GLOBAL,
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except share and per share data)
March 31, 2024December 31, 2023
ASSETS
Cash and cash equivalents$734,779 $737,612 
Short-term investments16,404 27,109 
Accounts receivable, net of allowances of $6,484 and $6,871, respectively446,883 337,703 
Prepaid expenses and other current assets95,036 88,570 
Total current assets1,293,102 1,190,994 
Long-term investments139,964 140,906 
Property and equipment, net of accumulated depreciation of $346,793 and $327,015, respectively190,897 188,169 
Intangible assets, net400,562 325,406 
Goodwill1,624,628 1,546,065 
Deferred income taxes8,733 8,731 
Other assets69,145 70,751 
TOTAL ASSETS$3,727,031 $3,471,022 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable$360,153 $123,256 
Accrued employee related costs26,262 50,068 
Other accrued liabilities44,012 43,612 
Income taxes payable, current18,019 14,458 
Deferred revenue, current199,880 184,549 
Other current liabilities15,008 15,890 
Total current liabilities663,334 431,833 
Long-term debt1,001,884 1,001,312 
Deferred income taxes65,261 45,503 
Income taxes payable, noncurrent8,486 8,486 
Deferred revenue, noncurrent7,172 8,169 
Other long-term liabilities78,882 82,721 
TOTAL LIABILITIES1,825,019 1,578,024 
Commitments and contingencies (Note 8)
Preferred stock, $0.01 par value. Authorized 1,000,000 and none issued— — 
Preferred stock - Series A, $0.01 par value. Authorized 6,000; total issued and outstanding zero— — 
Preferred stock - Series B, $0.01 par value. Authorized 20,000; total issued and outstanding zero— — 
Common stock, $0.01 par value. Authorized 95,000,000; total issued and outstanding 46,134,708 and 46,078,464 shares at March 31, 2024 and December 31, 2023, respectively461 461 
Additional paid-in capital475,926 472,201 
Retained earnings1,503,838 1,491,956 
Accumulated other comprehensive loss(78,213)(71,620)
TOTAL STOCKHOLDERS’ EQUITY1,902,012 1,892,998 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$3,727,031 $3,471,022 

September 30, 2017
December 31, 2016
ASSETS


Cash and cash equivalents$402,544

$123,950
Short-term investments—

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

199,871
Prepaid expenses and other current assets30,663

24,118
Current assets held for sale9,525

—
Total current assets630,214

347,999
Property and equipment, net71,333

68,094
Trade names, net106,713

115,853
Patent and patent licenses, net11,232

13,928
Customer relationships, net176,041

208,155
Goodwill1,107,988

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

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

5,289
Other assets6,364

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

$2,062,328
LIABILITIES AND STOCKHOLDERS’ EQUITY




Accounts payable and accrued expenses$134,617

$178,071
Income taxes payable—

16,753
Deferred revenue, current86,782

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

454,089
Long-term debt999,198

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

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

40,357
Other long-term liabilities4,679

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

—
TOTAL LIABILITIES1,324,146

1,147,792
Commitments and contingencies—

—
Preferred stock - Series A, $0.01 par value. Authorized 6,000; total issued and outstanding zero—

—
Preferred stock - Series B, $0.01 par value. Authorized 20,000; total issued and outstanding zero—

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

474
Additional paid-in capital318,710

308,329
Retained earnings692,387

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

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

$2,062,328


See Notes to Condensed Consolidated Financial Statements

(Unaudited)

-3-
j2 GLOBAL,

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

Three months ended March 31,
20242023
Total revenues$314,485 $307,142 
Operating costs and expenses:
Direct costs47,067 45,730 
Sales and marketing117,000 115,920 
Research, development, and engineering17,774 17,914 
General, administrative, and other related costs96,783 101,263 
Total operating costs and expenses278,624 280,827 
Income from operations35,861 26,315 
Interest expense, net(1,769)(4,480)
Loss on sale of businesses(3,780)— 
Unrealized loss on short-term investments held at the reporting date, net(10,705)(20,345)
Gain on investments, net— 357 
Other loss, net(104)(908)
Income before income tax (expense) benefit and loss from equity method investment19,503 939 
Income tax (expense) benefit(8,231)616 
Loss from equity method investment, net of income taxes(645)(9,182)
Net income (loss)$10,627 $(7,627)
Net income (loss) per common share:
Basic$0.23 $(0.16)
Diluted$0.23 $(0.16)
Weighted average shares outstanding: 
Basic45,860,033 46,987,249 
Diluted45,955,365 46,987,249 


 
See Notes to Condensed Consolidated Financial Statements

(Unaudited)

-4-
j2 GLOBAL,

ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in thousands)
Three months ended March 31,
20242023
Net income (loss)$10,627 $(7,627)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment(6,530)3,713 
Change in fair value on available-for-sale investments, net of tax benefit of $19 and tax expense of $109 for the three months ended March 31, 2024 and 2023, respectively(63)324 
Other comprehensive income, net of tax(6,593)4,037 
Comprehensive income (loss)$4,034 $(3,590)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
        
Net income$32,358
 $45,569
 $89,554
 $109,281
Other comprehensive income (loss), net of tax:       
Foreign currency translation adjustment7,703
 (328) 23,616
 (9,566)
Change in fair value on available-for-sale investments, net of tax expense of zero for the three and nine months of 2017, respectively, and $1,378 and $1,440 for the three and nine months of 2016, respectively—
 (2,249) —
 (2,359)
Other comprehensive income (loss), net of tax7,703
 (2,577) 23,616
 (11,925)
Comprehensive income$40,061
 $42,992
 $113,170
 $97,356


See Notes to Condensed Consolidated Financial Statements (Unaudited)




-5-
j2 GLOBAL,

ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
                                                          Three months ended March 31,
Cash flows from operating activities:20242023
Net income (loss)$10,627 $(7,627)
Adjustments to reconcile net income (loss) to net cash provided by operating activities: 
Depreciation and amortization48,453 54,623 
Non-cash operating lease costs2,770 2,933 
Share-based compensation8,872 8,402 
Provision for credit losses on accounts receivable50 441 
Deferred income taxes, net(2,709)(7,442)
Loss on sale of businesses3,780 — 
Loss from equity method investments645 9,182 
Unrealized loss on short-term investments held at the reporting date, net10,705 20,345 
Gain on investments, net— (357)
Other1,278 2,776 
Decrease (increase) in: 
Accounts receivable55,365 27,626 
Prepaid expenses and other current assets(9,423)(7,658)
Other assets(2,078)(2,048)
Increase (decrease) in: 
Accounts payable(62,270)6,922 
Deferred revenue15,169 12,085 
Accrued liabilities and other current liabilities(5,676)(4,896)
Net cash provided by operating activities75,558 115,307 
Cash flows from investing activities: 
Purchases of property and equipment(28,129)(30,017)
Acquisition of businesses, net of cash received(44,524)(8,001)
Proceeds from sale of equity investments— 3,174 
Proceeds from sale of businesses, net of cash divested1,238 — 
Other(66)(3,947)
Net cash used in investing activities(71,481)(38,791)
Cash flows from financing activities: 
Repurchase of common stock(3,923)(2,875)
Deferred payments for acquisitions(2,418)(6,679)
Other30 71 
Net cash used in financing activities(6,311)(9,483)
Effect of exchange rate changes on cash and cash equivalents(599)1,676 
Net change in cash and cash equivalents(2,833)68,709 
Cash and cash equivalents at beginning of period737,612 652,793 
Cash and cash equivalents at end of period$734,779 $721,502 
 Nine Months Ended September 30,
 2017 2016
Cash flows from operating activities:   
Net income$89,554
 $109,281
Adjustments to reconcile net earnings to net cash provided by operating activities:   
Depreciation and amortization118,597
 88,569
Amortization of financing costs and discounts9,094
 7,224
Share-based compensation13,740
 9,947
Provision for doubtful accounts9,099
 9,072
Deferred income taxes, net3,859
 (2,328)
Loss on extinguishment of debt and related interest expense7,962
 —
Gain on sale of businesses(4,715) —
Decrease (increase) in:   
Accounts receivable4,711
 (7,631)
Prepaid expenses and other current assets(264) (663)
Other assets134
 (7,947)
Increase (decrease) in:   
Accounts payable and accrued expenses(49,324) (4,601)
Income taxes payable(26,359) (927)
Deferred revenue(75) (4,134)
Liability for uncertain tax positions1,554
 8,502
Other long-term liabilities1,429
 (11,824)
Net cash provided by operating activities178,996
 192,540
Cash flows from investing activities:   
Maturity of available-for-sale investments—
 145,005
Purchase of available-for-sale investments(5) (75,834)
Purchases of property and equipment(29,483) (17,447)
Acquisition of businesses, net of cash received(47,268) (91,401)
Proceeds from sale of businesses, net of cash divested33,508
 —
Purchases of intangible assets(1,320) (2,014)
Net cash used in investing activities(44,568) (41,691)
Cash flows from financing activities:   
Issuance of long-term debt, net636,598
 —
Payment of debt(255,000) —
Proceeds from line of credit, net44,981
 —
Repayment of line of credit(225,000) —
Repurchases of common stock and restricted stock(7,862) (56,083)
Issuance of common stock under employee stock purchase plan194
 191
Exercise of stock options1,108
 3,272
Dividends paid(54,346) (48,768)
Deferred payments for acquisitions(5,062) (18,939)
Other(45) 1,680
Net cash provided by (used in) financing activities135,566
 (118,647)
Effect of exchange rate changes on cash and cash equivalents8,600
 (2,169)
Net change in cash and cash equivalents278,594
 30,033
Cash and cash equivalents at beginning of period123,950
 255,530
Cash and cash equivalents at end of period$402,544
 $285,563


See Notes to Condensed Consolidated Financial Statements

(Unaudited)

-6-


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

Three months ended March 31, 2024
Common stockAdditional paid-inRetainedAccumulated otherTotal
Stockholders’
SharesAmountcapitalearningscomprehensive lossEquity
Balance, January 1, 202446,078,464 $461 $472,201 $1,491,956 $(71,620)$1,892,998 
Net income— — — 10,627 — 10,627 
Other comprehensive loss, net of tax benefit of $19— — — — (6,593)(6,593)
Issuance of restricted stock, net56,244 — (5,152)1,229 — (3,923)
Share-based compensation— — 8,872 — — 8,872 
Other, net— — 5 26 — 31 
Balance, March 31, 202446,134,708 $461 $475,926 $1,503,838 $(78,213)$1,902,012 

Three months ended March 31, 2023
Common stockAdditional paid-inRetainedAccumulated otherTotal
Stockholders’
SharesAmountcapitalearningscomprehensive lossEquity
Balance, January 1, 202347,269,446 $473 $439,681 $1,537,830 $(85,373)$1,892,611 
Net loss— — — (7,627)— (7,627)
Other comprehensive loss, net of tax expense of $109— — — — 4,037 4,037 
Issuance of restricted stock, net16,647 — (3,336)461 — (2,875)
Share-based compensation— — 8,402 — — 8,402 
Other, net— — 66 1 — 67 
Balance, March 31, 202347,286,093 $473 $444,813 $1,530,665 $(81,336)$1,894,615 




See Notes to Condensed Consolidated Financial Statements (Unaudited)
-7-

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

j2 Global, Inc., together with its subsidiaries (“j2 Global” or the “Company”), is a leading provider of Internet services. Through its Business Cloud Services Division, the Company provides cloud services to businesses of all sizes, from individuals to enterprises,Presentation and licenses its intellectual property (“IP”) to third parties. In addition, the Business Cloud Services Division includes j2 Cloud Connect, which primarily focuses on our voice and fax products. The Digital Media Division specializes in the technology, gaming, lifestyle markets and healthcare markets, reaching in-market buyers and influencers in both the consumer and business-to-business space.

Overview
The accompanying interim condensed consolidated financial statements include the accountsCondensed Consolidated Financial Statements of j2 GlobalZiff Davis, Inc. and its direct and indirect wholly-owned subsidiaries.subsidiaries (“Ziff Davis”, the “Company”, “our”, “us”, or “we”), were prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), and all adjustments considered necessary for a fair presentation have been included. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying interim condensed consolidated financial statements are unaudited andCondensed Consolidated Financial Statements have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include allThe preparation of these Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the informationdate of the Condensed Consolidated Financial Statements, as well as the reported amounts of revenues and note disclosures required by GAAP for complete financial statements althoughexpenses during the Company believes that the disclosures made are adequate to make that information not misleading. In the opinion of management, all adjustments (consisting ofreporting periods. Actual results could differ from those estimates. All normal recurring adjustments) consideredadjustments necessary for a fair presentation have been reflected inof these interim financial statements. It is suggested that these financial statementsCondensed Consolidated Financial Statements were made.
This Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and the related notes theretoour Annual Report on Form 10-K for the year ended December 31, 2016 included in our Annual Report (Form 10-K)2023 filed with the SECSecurities and Exchange Commission ("SEC") on March 1, 2017. Accordingly, significant accounting policiesFebruary 26, 2024 and other disclosures normally provided have been omitted since such items are disclosed therein.
filings with the SEC.
The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period.

Description of Business
Use of EstimatesZiff Davis, Inc. is a vertically focused digital media and internet company whose portfolio includes brands in technology, shopping, gaming and entertainment, connectivity, health and wellness, 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 Cybersecurity and Martech business provides cloud-based subscription and license services to consumers and businesses including cybersecurity, privacy, and marketing technology.

Significant Accounting Policies
The preparation ofaccounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements included in accordanceits Form 10-K for the fiscal year ended December 31, 2023. For the three months ended March 31, 2024, there have been no new or material changes to the significant accounting policies discussed in the Company’s Form 10-K for the fiscal year ended December 31, 2023.
Recent Accounting Pronouncements
Recently issued applicable accounting pronouncements not yet adopted
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update provides for optional financial reporting alternatives to reduce costs and complexities associated with accounting principles generally acceptedfor contracts, hedging relationships, and other transactions affected by reference rate reform. This update applies only to contracts, hedging relationships, and other transactions that reference London Interbank Offer Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The accommodations were available for all entities through December 31, 2022, with early adoption permitted. This update was later amended by ASU 2022-06.
In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. This update defers the expiration date of Accounting Standards Codification (“ASC”) Topic 848 from December 31, 2022 to December 31, 2024. We are currently evaluating the effect the adoption of this update will have on our 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 United StatesCodification. Certain of America (“GAAP”) requires managementthe amendments represent clarifications to make estimatesor technical corrections of the current requirements. For entities subject to the SEC's existing disclosure requirements and assumptionsentities required to file/furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that affectare not subject to contractual restrictions on transfer, the reported amounts of assets and liabilities ateffective 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
-8-

ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
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 on December 31, 2024 and for prospective interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. Early adoption is permitted. This update 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 on December 31, 2024. Early adoption is permitted. This update will result in the required additional disclosures being included in our consolidated financial statements, including judgments about investment classifications,once adopted. We are currently evaluating the effect the adoption of this update will have on our consolidated financial statements and related disclosures.

2.Revenues
Digital Media
Digital Media revenues are earned primarily from the delivery of advertising and performance marketing services, licensing, and subscriptions to services and information.
Advertising and Performance Marketing
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, production services, and the reported amountsmanagement of net revenueclient gift card programs. Such revenues are generally recognized over the period in which the products or services are delivered.
Subscription and expenses duringLicensing
Revenue from subscriptions is earned through the reporting period. We believe that our most significant estimatesgranting 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 thosealso 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 valuationprovision 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 acquiredto clients. Assets are licensed for clients’ use in their own promotional materials or otherwise and liabilities assumedmay include logos, editorial reviews, or other copyrighted material that represent symbolic intellectual property, as defined in connectionASC 606, Revenue from Contracts with business combinations, long-livedCustomers. 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.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Digital Media subscription and intangible asset impairment, contingent consideration, income taxeslicensing revenues include revenues from transactions involving the sale of perpetual software licenses, related software support, and contingenciesmaintenance. Revenue is recognized for software transactions with multiple performance obligations after (i) the contract has been approved and allowances for doubtful accounts. On an ongoing basis, management evaluateswe are committed to perform the respective obligations and (ii) we can identify and quantify each obligation and its estimates basedrespective 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 historical experience and on various other factorsthe nature of the obligation.
Revenues from software license performance obligations are generally recognized upfront at the point in time that the Company believessoftware is made available to be reasonable under the circumstances. Actual results could materially differcustomer 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 estimates.

Allowances for Doubtful Accounts

j2 Global reserves for receivables it may not be able to collect. These reserves forfrom the Company’s Business Cloud Services segmentsale 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 typically driven by the volume of credit card declineshighly interdependent and past due invoicesinterrelated and are based on historical experienceaccounted for as well as an evaluation of current market conditions. These reservesa bundled performance obligation. The revenues for this bundled performance obligation are generally recognized at the Company’s Digital Media segmentpoint in time that the hardware and software products are typically driven by past due invoices based on historical experience. On an ongoing basis, management evaluatesdelivered and ownership is transferred to the adequacy of these reserves.customer.

Revenue Recognition

Business Cloud Services

Cybersecurity and Martech
The Company’s Business Cloud ServicesCybersecurity and Martech revenues substantially consist of monthly recurringsubscription and licensing revenues which primarily include subscription and usage-based fees, a significant portion of which are primarily paid in advance. In accordance with GAAP, the Company recognizes revenue when persuasive evidence of an arrangement exists, services have been provided, the sales price is fixed and determinable and collection is probable. The Company defers the portions of monthly, quarterly, semi-annuallysemi-annual, and annually recurring subscription and usage-basedannual fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned. Additionally, the Company defers and recognizes subscriber activation fees and related direct incremental costs over a subscriber’s estimated useful life.



Along with ourits numerous proprietary Business Cloud ServicesCybersecurity and Martech solutions, the Company also generates subscription revenues by reselling various third partythird-party solutions, primarily through ourits email security and online backup linesline of business. These third partythird-party solutions, along with ourthe Company’s proprietary products, allow the Companyit to offer customers a variety of solutions to better meet theirthe customer’s needs. 
Principal vs. Agent
The Company determines whether reseller revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance for principal-agent considerations and the Company places the most weight on three factors: whether or not the Company (i) is the primary obligor in the arrangement, (ii) has latitude in determining pricing and (iii) bears credit risk.

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

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

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

Digital Media

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

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

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

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

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-operatedowned and operated web properties, on third partythird-party sites, or on unaffiliated advertising networks,networks; (ii) through the Company’s lead-generation businessbusiness; and (iii) through the Company’s Digital Media licensing program.subscriptions, 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.third-party platforms, primarily related to the transfer of functional intellectual property. The Company records revenue on a net basis with respect to revenue earned from servicing the client gift card programs.

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Fair Value Measurements
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
j2 Global complies withDisaggregated Revenues
Revenues from external customers classified by revenue source are as follows (in thousands).
Three months ended March 31,
20242023
Digital Media
Advertising and performance marketing$156,096 $156,082 
Subscription and licensing73,467 69,148 
Other9,489 8,981 
Total Digital Media revenues$239,052 $234,211 
Cybersecurity and Martech
Subscription and licensing$75,452 $73,016 
Total Cybersecurity and Martech revenues$75,452 $73,016 
Elimination of inter-segment revenues(19)(85)
Total Revenues$314,485 $307,142 
The Company recorded $74.1 million and $65.1 million of revenue for the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic No. 820, Fair Value Measurementsthree months ended March 31, 2024 and Disclosures (“ASC 820”), in measuring fair value and in disclosing fair value measurements. ASC 820 provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities.

As of September 30, 2017, the carrying value of cash and cash equivalents, short-term investments, accounts receivable, interest receivable, accounts payable, accrued expenses, interest payable, customer deposits and long-term debt are reflected2023, respectively, which was previously included in the financial statements at cost. With the exception of long-term debt, cost approximates fair value due to the short-term nature of such instruments. The fair valuedeferred revenue balance as of the Company’s outstanding debt was determined using the quoted market pricesbeginning of debt instruments with similar terms and maturities, if available. As of the same dates, the carrying value of other long-term liabilities approximated fair value as the related interest rates approximate rates currently available to j2 Global.each respective year.

Performance Obligations
Property and Equipment

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

Debt Issuance Costs and Debt Discount

j2 Global capitalizes costs incurred with borrowing and issuance of debt securities and records debt issuance costs and discounts as a reduction to the debt amount. These costs and discounts are amortized and included in interest expense over the life of the borrowing or term of the credit facility using the effective interest method.
Contingent Consideration

j2 Global measures the contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 6 - Fair Value Measurements). The Company may use various valuation techniques dependingbe a party to multiple concurrent contracts with the same customers, or a party or parties related to those customers. Some of these 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 terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses a probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and the amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

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



Segment Reporting

Accounting guidance establishes standards for the way that public business enterprises report information about operating segments in their annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. Accounting guidance also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company operates as two segments: (1) Business Cloud Services and (2) Digital Media.

Reclassifications

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

2.Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification (“ASC”) Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entityCompany expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferralservices provided. The Company includes any fixed consideration within its contracts as part of the Effective Date, which deferredtotal transaction price. The Company’s contracts occasionally contain some component of variable consideration, such as commissions that are recognized in the effective dateperiod of the new revenue standardcommissionable 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 periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606). This ASU is related to reporting revenue gross versus net, or principal versus agent considerations. This ASU is meant to clarify the guidance in ASU 2014-09, Revenue from Contracts with Customers, as it pertains to principal versus agent considerations. Specifically, the guidance addresses how entities should identify goods and services being provided to a customer, the unit of account for a principal versus agent assessment, how to evaluate whether a good or service is controlled before being transferred to a customer, and how to assess whether an entity controls services performed by another party. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This ASU is meant to clarify the guidance in FASB ASU 2014-09, Revenue from Contracts with Customers. Specifically, the guidance addresses an entity’s identification ofreturns.
The Company satisfies its performance obligations inupon 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 contract, as well as an entity’s evaluationrevenue share based on the terms of the agreement.
Payment terms vary by type and location of our customers and the services offered. The time between invoicing and when payment is due is generally 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 its promisethe 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 grant a license ofbe functional intellectual property and whether or not that revenue is recognized over time orwhere the performance obligations are satisfied at a point in time. In May 2016,
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Our Cybersecurity and Martech business consists primarily of performance obligations that are satisfied over time. This has been determined based on the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvementsfact that the nature of services offered are subscription based where the customer simultaneously receives and Practical Expedients. This ASU does not changeconsumes the core principlebenefit of the guidance in Topic 606. Instead,services provided regardless of whether the amendments provide clarifying guidance incustomer uses the services. Depending on the individual contracts with the customer, revenue for these services is 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.
The Company has concluded the best measure of progress toward the complete satisfaction of the performance obligation is a few narrow areas and add some practical expedients. In December 2016,time-based measure. The Company recognizes revenue on a straight-line basis throughout the FASB issued 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in this ASU represent changes to clarify the Codification or to correct unintended application of guidance. This ASU must be applied retrospectively to eachsubscription period, presented or as a cumulative-effect adjustment asusage occurs, or when functional intellectual property is delivered for services outside of the date of adoption. The Company plans to adopt ASC 606 insubscription, and believes that the first quarter of 2018 using the modified retrospective method and will present the cumulative effect of applying the standard to all contracts not completed asused is a faithful depiction of the adoption date. transfer of goods and services.
Transaction Price Allocation to Future Performance Obligations
As of September 30, 2017, the Company is in the process of: (i) finalizing its review of customer contracts for its business segments and its assessment of the impact of the standard on these contracts; (ii) training internal stakeholders on the pending changes to revenue recognition policies; and (iii) assessing the need for appropriate changes to the Company’s business processes and controls to support revenue recognition and disclosures under the new standard. At this time, the Company anticipates that the primary change to its accounting policies for its customer contracts upon adopting ASC 606 will relate to the timing of when revenue is recognized. While revenue from certain contracts will continue to be recognized at a point in time, revenue from other contracts may be required to be recognized over time. Currently, the Company expects changes in the revenue recognition for licensing and patents. The Company is still finalizing its assessment of customer contracts, including the specific dollar impact of any changes in recognition will have on the Company’s consolidated financial statements. The Company expects to complete its implementation work in time to adopt ASC 606 for periods starting after DecemberMarch 31, 2017.



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

In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of this ASU on our financial statements. The Company currently has both capital and operating leases, both domestically and internationally, with varying expiration dates through 2025 in2024, the aggregate amount of $65.9transaction price that is allocated to future performance obligations was approximately $44.1 million for the period ended September 30, 2017.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on our financial statementsbe recognized as follows: 61% by December 31, 2024, 30% by December 31, 2025, and related disclosures.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory.9% thereafter. The amendments in this ASU reduce the complexity in the accounting standards by allowing the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, the income tax consequence was not recognized until the asset was sold to an outside party. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Companyamount disclosed does not expectinclude revenues related to performance obligations that are part of contracts with original expected durations of twelve months or less or portions of the adoption of this ASUcontracts that remain subject to have a material impact on our financial statements and related disclosures.

In January 2017,cancellations. Further, the FASB issued 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this ASU provide a robust framework to use in determining when a set of assets and activities is a business. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted and the standard should be applied prospectively. The Companydisclosure does not expectinclude contracts for which the adoption of this ASUCompany recognizes revenue in proportion to have a material impact on our financial statements and related disclosures.

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

In February 2017, the FASB issued 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. This ASU provides guidance which clarifies the scope and accounting for financial assets that meet the definition of an “in-substance nonfinancial asset” and defines the term, “in-substance nonfinancial asset.” In addition, this ASU also adds guidance for partial sales of nonfinancial assets. This ASU is effective for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted and should be adopted retrospectively for all periods presented or retrospectively


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

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



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

3.Business Acquisitions

The Company uses acquisitions as a strategy to grow its customer base by increasing its presence in new and existing markets, expandexpanding and diversifydiversifying its service offerings, enhanceenhancing its technology, acquireand acquiring skilled personnel and enter into other jurisdictions.personnel.

TheFor the three months ended March 31, 2024, the Company completedrecorded $7.5 million of incremental revenue from the following acquisitionsbusinesses acquired during the first nine monthsquarter of fiscal 2017, paying the purchase price in cash in each transaction: (a) an asset purchase of sFax, acquired on March 31, 2017, an Austin-based provider of mobile cloud faxing for health care; (b) a share purchase of the entire issued capital of WeCloud AB, acquired on June 12, 2017, a Swedish-based provider of cloud-based Internet security services; (c) an asset purchase of MyPhoneFax.com, acquired on June 30, 2017, a provider of online fax services; (d) an asset purchase of EZ Publishing (dba “StreamSend”), acquired on August 22, 2017, a provider of email marketing solutions;2023 and (e) other immaterial acquisitions of online data backup, email marketing and email security businesses.

The condensed consolidated statement of income, since the date of each acquisition, and balance sheet as of September 30, 2017, reflect the results of operations of all 2017 acquisitions. For the nine months ended September 30, 2017, these acquisitions contributed $9.4 million to the Company’s revenues.2024. Net income contributed by these acquisitions was not separately identifiable due to j2 Global’sthe Company’s integration activities and is impracticable to provide.
2024 Acquisition
On February 5, 2024, we completed an acquisition of 100% of the equity interest in TDS Gift Cards, a California-based digital gifting and branded payments platform, which is reported within our Digital Media segment and is expected to expand our ability to offer innovative shopping solutions to our merchant partners and broaden our capabilities to help facilitate commerce between consumers and some of the most highly visible brands. Total consideration for these transactionsthis transaction was $58.4$187.5 million, or $44.5 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.

acquired.
The following table summarizes the allocation of the preliminary purchase consideration for these acquisitionsthe acquisition of TDS Gift Cards as of March 31, 2024 (in thousands):
Assets and LiabilitiesValuation
Cash$142,957 
Accounts receivable and other current assets171,500 
Intangible assets101,754 
Goodwill85,901 
Other assets289 
Accounts payable and other current liabilities(290,272)
Deferred tax liability, noncurrent(23,788)
Other noncurrent liabilities(861)
Total$187,480 
Assets and LiabilitiesValuation
Accounts receivable$831
Property and equipment451
Trade names1,543
Customer relationships25,627
Other intangibles4,659
Goodwill31,253
Accounts payable and accrued expenses(1,475)
Deferred revenue(4,527)
 Total$58,362

During the nine months ended September 30, 2017, the purchase price accounting has been finalized for the following acquisitions: (i) Fonebox; and (ii) other immaterial fax, online data backup, email security and email marketing businesses. The initial accounting for all other 2017 acquisitionsthe 2024 acquisition is incomplete due to the timing of available information and is subject to change, which may be significant. j2 Globalchange. The Company has recorded provisional amounts which may be based upon past acquisitions with similar attributes for certain intangible assets (including trade names, software and customer relationships), preliminary acquisition date working capital and related tax items.as of March 31, 2024.

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

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

Goodwill represents the excess of the purchase price over theThe fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with these acquisitions during the nine months ended September 30, 2017 is $31.3includes accounts receivable of $170.9 million, of which $23.6 millionnone is expected to be uncollectible. None of the goodwill recognized is expected to be deductible for income tax purposes.

The preliminary amounts assigned to intangible assets by type for the acquisition during the three months ended March 31, 2024 are summarized in the table below (in thousands):
4.Investments

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

Gross Carrying ValueWeighted average estimated life
5.Customer relationshipsAssets Held for Sale$82,762 10 years
Trade names and trademarks1,716 2 years
Other purchased intangibles17,276 10 years
Total gross carrying value$101,754 

The Condensed Consolidated Statement of Operations and the Condensed Consolidated Balance Sheet as of March 31, 2024, reflect the results of operations of the 2024 acquisition since the date of the acquisition.
2023 Acquisition
The Company classifies assets heldcompleted an immaterial Digital Media acquisition during the three months ended March 31, 2023, paying the purchase price in cash.
The Condensed Consolidated Statement of Operations since the date of the acquisition, reflect the results of operations of the 2023 acquisition.
Goodwill recognized associated with this acquisition during the three months ended March 31, 2023 was $3.8 million, all of which is expected to be deductible for sale when management approves and commits to a formal planincome tax purposes. Approximately $4.2 million of saledefinite-lived intangibles were recorded in connection with the expectationacquisition during the sale will bethree months ended March 31, 2023.

4.Investments
Investments consist of equity and debt securities.
Investment in equity securities
On October 7, 2021, we completed within one year. The net assetsthe separation of our cloud fax business (the “Separation”) into an independent publicly traded company. Following the Separation, the Company retained shares of publicly traded common stock of Consensus Cloud Solutions, Inc. (“Consensus”). As of each of March 31, 2024 and December 31, 2023, the Company held approximately 1.0 million shares of the business held for sale are then recorded atcommon stock of Consensus. As of March 31, 2024 and December 31, 2023, the lower of their current carrying value orof the investment in Consensus was $16.4 million and $27.1 million, respectively, and is included in ‘Short-term investments’ in the Condensed Consolidated Balance Sheets. The Company accounts for its investment in Consensus at fair value under the fair market value less costs to sell.

option, and the related fair value gains and losses are recognized in earnings.
During the third quarterthree months ended March 31, 2024 and 2023, the Company sold zero and 52,393 shares, respectively, of common stock of Consensus in the open market.
Losses on equity securities recorded in ‘Unrealized loss on short-term investments held at the reporting date, net’ in the Condensed Consolidated Statements of Operations consisted of the following (in thousands):
Three months ended March 31,
20242023
Net losses during the period$(10,705)$(19,988)
Less: gains on securities sold during the period— 357 
Unrealized losses recognized during the period on short-term investments held at the reporting date, net$(10,705)$(20,345)
On July 31, 2023, the Company entered into an agreement to purchase $25.0 million of equity in Xyla, Inc. (“Xyla”) for a minority ownership stake. This minority investment was made in the form of cash and shares of the Company’s common stock. The Company accounts for its investment in Xyla as an equity investment without a readily determinable fair value measured under the measurement alternative in accordance with ASC Topic 321, Investments — Equity Securities. As of each of March 31, 2024 and December 31, 2023, the carrying value of the investment in Xyla was $25.3 million, including transaction costs, and is included in ‘Long-term investments’ in the Condensed Consolidated Balance Sheets.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
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 Amendment increased the interest rate on the convertible notes to 6%, extended the maturity date, and subordinated all existing and future obligations, liabilities, and indebtedness of the entity to the entity’s senior creditor, as defined in the Amendment. This investment is included in ‘Long-term investments’ in the Condensed Consolidated Balance Sheets and is classified as available-for-sale. The investment was initially measured at its transaction price and subsequently remeasured at fair value, with unrealized gains and losses reported as a component of other comprehensive income.
As of March 31, 2024, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities was approximately $15.6 million, with a contractual maturity date that was more than one year but less than five years. As of December 31, 2023, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities was approximately $15.7 million, with a contractual maturity date that was more than one year but less than five years. Cumulative gross unrealized gains on investment in corporate debt securities as of March 31, 2024 and December 31, 2023 were approximately $0.6 million and $0.7 million, respectively.
 There were no investments in an unrealized loss position as of March 31, 2024 and December 31, 2023.
During the three months ended March 31, 2024 and 2023, the Company did not recognize any other-than-temporary impairment losses on its debt securities.
Equity method investment
On September 25, 2017, the Company committedentered into a commitment to a plan to sell Tea Leaves Health, LLC (“Tea Leaves”invest in OCV Fund I, LP (the “OCV Fund”), a subsidiary within. The Company recognizes its equity in the Digital Media segment, as it was determined to be a non-core asset. This determination resulted in a reclassification of assets held for sale on the condensed consolidated balance sheet with a net carrying value of $55.6 million as of September 30, 2017.

The following table presents information relatedearnings or losses relating to the assetsinvestment in the OCV Fund on a one-quarter lag due to the timing and liabilitiesavailability of financial information from the OCV Fund. If the Company becomes aware of a significant decline in value that were classified as held for saleis other-than-temporary, the loss will be recorded in our condensed consolidated balance sheets (in thousands):
  September 30, 2017
   
Accounts receivable, net $5,568
Prepaid expenses and other current assets 3,957
Property and equipment, net 1,734
Goodwill 36,312
Other intangible assets, net 10,859
Deferred income taxes, non-current 6,305
Other assets 4
Total assets held for sale $64,739
   
Accounts payable and accrued expenses $2,200
Deferred revenue, current 2,236
Deferred income taxes, non-current 4,709
Other long-term liabilities 4
Total liabilities held for sale $9,149

the period in which the Company identifies the decline.
During the second quarter 2017,three months ended March 31, 2024 and 2023, the Company committedrecognized a loss from equity method investment, net of income taxes of $0.6 million and $9.2 million, net of tax expense (benefit), respectively. The losses in the periods presented were primarily the result of losses in the underlying investments.
As of March 31, 2024, both the carrying value and the maximum exposure of the Company’s equity method investment was approximately $99.0 million. As of December 31, 2023, both the carrying value and the maximum exposure of the Company’s equity method investment was approximately $99.9 million. These equity securities are included in ‘Long-term investments’ in our Condensed Consolidated Balance Sheets.
As a limited partner, the Company’s maximum exposure to a planloss is limited to sellits proportional ownership in the Cambridge BioMarketing Group, LLC (“Cambridge”), a subsidiary within the Digital Media segment, as it was determined to be a non-core asset. On July 12, 2017, in a cash transaction,partnership. In addition, the Company sold Cambridge for a gainis not required to contribute any future capital. Finally, there are no call or put options, or other types of $3.2 millionarrangements, which was recordedlimit the Company’s ability to participate in other (income) expense, net.losses and returns of the OCV Fund.


During the third quarter 2017, the Company committed to a plan to sell j2 Australia Hosting Pty Ltd (dba “Web24”), a subsidiary within the Business Cloud Services segment, as it was determined to be a non-core asset. On September 1, 2017, in a cash transaction, the Company sold Web24 for a gain of $1.6 million which was recorded in other (income) expense, net.



6.5.Fair Value Measurements

j2 GlobalThe Company complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that the fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
value.
§
lLevel 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
§lLevel 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.
§lLevel 3 – Unobservable inputs which are supported by little or no market activity.

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
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 common stock is an investment in equity securities for which the Company elected the fair value option, and the fair value of the investment in Consensus common stock and subsequent fair value changes are included in our assets of and results from continuing operations, respectively. As of March 31, 2024 and December 31, 2023, our investment in Consensus common stock was remeasured at fair value based on Consensus’ closing stock price and had a balance of $16.4 million and $27.1 million, respectively, in the Condensed Consolidated Balance Sheets. For the three months ended March 31, 2024 and 2023, the unrealized losses of $10.7 million and $20.3 million, respectively, were recorded in the Condensed Consolidated Statement of Operations. The fair value of the investment in Consensus common stock is determined using the quoted market prices, which is a Level 1 input.
The Company’s investment in certificates of deposit are classified within Level 2. The Company values these Level 2 investments based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.
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 Convertible Notes (see Note 8 - Long-Term Debt)corporate debt securities is determined using recent quoted market prices or dealer quotes for such securities, which areprimarily based on estimates and assumptions, including Level 13 inputs. The fair valueAs of our senior notes (8.0% senior unsecured notes at DecemberMarch 31, 2016 and 6.0% senior unsecured notes at September 30, 2017) (see Note 8 - Long-Term Debt) is determined using quoted market prices or dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 2 inputs. The fair value of debt at September 30, 20172024 and December 31, 20162023, the fair value was $1.2 billiondetermined based upon various probability-weighted scenarios which included discount rate assumptions between 13% and $792.2 million, respectively.

14%, depending on the probability scenario. In addition, the 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 Convertible Notes which is accounted forprobability scenario, as a derivative with fair value adjustments being recorded to interest expense. This derivative is fair valued using a binomial lattice convertible bond pricing model using historicalof March 31, 2024 and implied market information, which are Level 2 inputs.

as of December 31, 2023.
The Company classifies its contingent consideration liability in connection with its acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. The fairvaluation approaches used to value ofLevel 3 investments considers unobservable inputs in the contingent consideration liability was determined using option based approaches. This methodology was utilized because the distribution of payments is not symmetricmarket such as time to liquidity, volatility, dividend yield, and amounts are only payable upon certain earnings before interest, tax, depreciation and amortization (“EBITDA”) thresholds being reached. Such valuation approach included the Monte-Carlo simulation for the contingency since the financial metric driving the payments is path dependent.breakpoints. Significant increases or decreases in eitherany of the inputs noted above in isolation wouldcould result in a significantly lower or higher fair value of measurement.


As of each of March 31, 2024 and December 31, 2023, the contingent consideration was determined using a 100% probability of 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):
March 31, 2024Level 1Level 2Level 3Fair ValueCarrying Value
Assets:
Cash equivalents:
Money market and other funds$272,847 $— $— $272,847 $272,847 
Certificates of deposit— 2,304 — 2,304 2,304 
Short-term investments:
Consensus common stock16,404 — — 16,404 16,404 
Long-term investments:
Investment in corporate debt securities— — 15,617 15,617 15,617 
Total assets measured at fair value$289,251 $2,304 $15,617 $307,172 $307,172 
Liabilities:
Contingent consideration$— $— $2,834 $2,834 $2,834 
Total liabilities measured at fair value$— $— $2,834 $2,834 $2,834 
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
September 30, 2017Level 1 Level 2 Level 3 Fair Value
December 31, 2023December 31, 2023Level 1Level 2Level 3Fair ValueCarrying Value
Assets:       
Cash equivalents:       
Cash equivalents:
Cash equivalents:
Money market and other funds$127,751
 $—
 $—
 $127,751
Money market and other funds
Money market and other funds
Short-term investments:
Consensus common stock
Consensus common stock
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 value$127,751
 $—
 $—
 $127,751
       
Liabilities:       
Contingent interest derivative$—
 $958
 $—
 $958
Total liabilities measured at fair value$—
 $958
 $—
 $958
       
December 31, 2016Level 1 Level 2 Level 3 Fair Value
Assets:       
Cash equivalents:       
Money market and other funds$7,737
 $—
 $—
 $7,737
Certificates of deposit—
 60
 —
 60
Total assets measured at fair value$7,737
 $60
 $—
 $7,797
       
Liabilities:
Liabilities:       
Contingent consideration$—
 $—
 $17,450
 $17,450
Contingent interest derivative—
 958
 —
 958
Contingent consideration
Contingent consideration
Total liabilities measured at fair value$—
 $958
 $17,450
 $18,408
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 ninethree months ended September 30, 2017,March 31, 2024 and 2023, there were no transfers that have occurred between levels.

The following table presents a reconciliation of the Company’s Level 3 financial assets or liabilitiesrelated to our contingent consideration arrangements and investment in corporate debt securities that are measured at fair value on a recurring basis (in thousands):
Three months ended March 31,
20242023
Contingent Consideration ArrangementsCorporate Debt SecuritiesContingent Consideration ArrangementsCorporate Debt Securities
Balance as of January 1$2,834 $15,699 $555 $15,586 
Fair value adjustments (1)
— (82)— 433 
Balance as of March 31$2,834 $15,617 $555 $16,019 
 Level 3 Affected line item in the Statement of Income
Balance as of January 1, 2017$17,450
  
Contingent consideration—
  
Total fair value adjustments reported in earnings(600) General and administrative
Contingent consideration payments(16,850) Not applicable
Balance as of September 30, 2017$—
  

In connection with the acquisition of Salesify, on September 17, 2015, contingent consideration of up to an aggregate of $17.0 million may be payable upon achieving certain future income thresholds and had a(1)The fair value adjustments to the corporate debt securities in the table above were recorded in ‘Change in fair value on available-for-sale investments, net’ in the Condensed Consolidated Statements of zero and $0.6 million at September 30, 2017 and December 31, 2016, respectively.

DuringComprehensive Income (Loss) during the ninethree months ended September 30, 2017, the Company recorded a decrease in theMarch 31, 2024 and 2023.
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.
Other Fair Value Disclosures
The fair value of the contingent considerationCompany’s 4.625% Senior Notes and 1.75% Convertible Notes (as defined in Note 7 — Debt) was determined using quoted market prices or dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 1 inputs. If such information is not available for the 1.75% Convertible Notes, the fair value is determined using cash-flow models of $0.6 million and reported such decrease in general and administrative expenses.the scheduled payments discounted at market interest rates for comparable debt without the conversion feature.

-16-


ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The following table presents a reconciliation of the Company’s derivative instruments (in thousands):
 Amount Affected line item in the Statement of Income
Derivative Liabilities:   
Level 2:   
Balance as of January 1, 2017$958
  
Total fair value adjustments reported in earnings—
  
Balance as of September 30, 2017$958
�� 

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

7.Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recordedfinancial instruments measured at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarksonly for disclosure purposes:
March 31, 2024December 31, 2023
Carrying ValueFair ValueCarrying ValueFair Value
4.625% Senior Notes$456,898 $414,467 $456,796 $405,408 
1.75% Convertible Notes$544,986 $519,233 $544,516 $519,492 

6.Goodwill and trade names, developed technologies and other intangible assets. The fair values of these identified intangible assets are based upon expected future cash flows or income, which take into consideration certain assumptions such as customer turnover, trade names and patent lives. These determinations are primarily based upon the Company’s historical experience and expected benefit of each intangible asset. If it is determined that such assumptions are not accurate, then the resulting change will impact the fair value of the intangible asset. Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from one to 20 years.Intangible Assets

Goodwill
The changes in carrying amounts of goodwill for the ninethree months ended September 30, 2017March 31, 2024 are as follows (in thousands):
Digital MediaCybersecurity and MartechConsolidated
Balance as of January 1, 2024$1,016,880 $529,185 $1,546,065 
Goodwill acquired (1)
85,900 — 85,900 
Goodwill removed due to sale of businesses (2)
(3,983)— (3,983)
Foreign exchange translation(1,188)(2,166)(3,354)
Balance as of March 31, 2024$1,097,609 $527,019 $1,624,628 
 Business Cloud Services Digital Media Consolidated
Balance as of January 1, 2017$559,152
 $563,658
 $1,122,810
Goodwill acquired (Note 3)31,253
 —
 31,253
Goodwill reclassified to noncurrent assets held for sale (1)
—
 (36,312) (36,312)
Goodwill written off related to sale of a business unit (2)(3)
(3,614) (17,815) (21,429)
Purchase accounting adjustments (4)
(766) (1,464) (2,230)
Foreign exchange translation13,811
 85
 13,896
Balance as of September 30, 2017$599,836
 $508,152
 $1,107,988

(1)During the third quarter 2017, the Company reclassified $36.3 million of goodwill to noncurrent assets held for saleGoodwill recognized in connection with Tea Leavesthe acquisition during the three months ended March 31, 2024 (see Note 5 - Assets Held for Sale)3 — Business Acquisitions).

(2)On July 12, 2017,During the three months ended March 31, 2024, in a cash transaction, the Company sold Cambridgean international asset at Digital Media within its shopping vertical, which resulted in $17.8$4.0 million of goodwill being written offremoved in connection with this sale (see Note 5 - Assets Held for Sale).sale.

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

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



Intangible Assets with Indefinite Lives:

Intangible assets are summarizedGoodwill as of September 30, 2017each of March 31, 2024 and December 31, 2016 as follows (in thousands):
 September 30,
2017		 December 31,
2016
Trade name$27,379
 $27,379
Other5,432
 5,432
Total$32,811
 $32,811

2023 reflects accumulated impairment losses of $84.2 million in the Digital Media reportable segment. Following an impairment in 2023 to a reporting unit within the Digital Media reportable segment, there was no excess of reporting unit fair value over the carrying amount. As such, since this last impairment test, any further decrease in estimated fair value would result in an additional impairment charge to goodwill. Changes in market conditions, and key assumptions made in future quantitative assessments, including expected cash flows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge. As of March 31, 2024, this reporting unit had goodwill of approximately $79.2 million.
Intangible Assets Subject to Amortization:Amortization

As of September 30, 2017,March 31, 2024, intangible assets subject to amortization relate primarily to the following (in thousands):
Historical
Cost		Accumulated
Amortization		Net
Trade names and trademarks$349,490 $199,293 $150,197 
Customer relationships774,154 569,148 205,006 
Other purchased intangibles396,962 351,603 45,359 
Total$1,520,606 $1,120,044 $400,562 
 
Weighted-Average
  Amortization
Period
 
Historical
Cost
 
Accumulated
Amortization
 Net
Trade names11.5 years $127,525
 $48,191
 $79,334
Patent and patent licenses6.6 years 66,829
 55,597
 11,232
Customer relationships (1)
9.4 years 414,996
 236,186
 178,810
Other purchased intangibles5.2 years 196,157
 56,411
 139,746
Total  $805,507
 $396,385
 $409,122


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

As of December 31, 2016,2023, intangible assets subject to amortization relate primarily to the following (in thousands):
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 
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
 
Weighted-Average
  Amortization
Period
 
Historical
Cost
 
Accumulated
Amortization
 Net
Trade names11.5 years $127,342
 $38,868
 $88,474
Patent and patent licenses6.6 years 65,605
 51,677
 13,928
Customer relationships (1)
9.6 years 390,930
 182,775
 208,155
Other purchased intangibles6.0 years 195,913
 27,590
 168,323
Total  $779,790
 $300,910
 $478,880

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


Amortization expense, included in general‘General, administrative, and administrative expense, approximated $31.7other related costs’ in our Condensed Consolidated Statements of Operations, was approximately $26.3 million and $23.7$33.3 million for the three month periodmonths ended September 30, 2017March 31, 2024 and 2016,2023, respectively.

7.Debt
Long-term debt consists of the following (in thousands):
March 31, 2024December 31, 2023
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(2,386)(2,463)
Deferred issuance costs (1)
(5,768)(6,263)
Total long-term debt$1,001,884 $1,001,312 
(1)Includes $5.0 million and $5.5 million of carrying amount of deferred issuance costs on the 1.75% Convertible Notes as of March 31, 2024 and December 31, 2023, respectively, and $94.3$0.8 million and $69.6$0.8 million forof carrying amount of deferred issuance costs on the nine month period ended September 30, 20174.625% Senior Notes as of March 31, 2024 and 2016,December 31, 2023, respectively. Amortization expense is estimated to approximate $174.8

As of March 31, 2024, $550.0 million $97.4of principal will mature in 2026 and $460.0 million $53.3 million, $36.9 million and $29.7 million for fiscal years 2017 through 2021, respectively, and $111.3 million thereafter through the duration of the amortization period.

principal will mature in 2030.

8.    Long-Term Debt

6.0%4.625% Senior Notes

On June 27, 2017, j2 Cloud Services, LLC (“j2 Cloud”) and j2 Cloud Co-Obligor (the “Co-Issuer” and together with j2 Cloud, the “Issuers”), wholly-owned subsidiaries ofOctober 7, 2020, the Company completed the issuance and sale of $650$750.0 million aggregate principal amount of their 6.0%its 4.625% senior notes due in 20252030 (the “6.0%“4.625% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933. j2 Cloud1933, as amended. The Company received proceeds of $636.2$742.7 million after deducting the initial purchasers’ discounts, commissions and offering expenses and is presented as Long-term debt,expenses. The net of deferred issuance costs, on the condensed consolidated balance sheets as of September 30, 2017. The proceeds were used to redeem all of j2 Cloud’s 8.0% notesits then outstanding 6.0% Senior Notes due in 2020,2025 and, to distribute sufficient net proceeds to j2 Global to pay off all amounts outstanding under its existing credit facility, with the remaining net proceeds to be usedwere available for general corporate purposes including acquisitions.which may include acquisitions and the repurchase or redemption of other outstanding indebtedness.
The 6.0% Senior NotesThese senior notes bear interest at a rate of 6.0%4.625% per annum, payable semi-annually in arrears on JanuaryApril 15 and JulyOctober 15 of each year, commencing on JanuaryApril 15, 2018.2021. The 6.0%4.625% Senior Notes mature on JulyOctober 15, 2025,2030, and are senior unsecured obligations of the IssuersCompany which are guaranteed, jointly and are guaranteedseverally, on an unsecured basis by certain of the Company’s existing and future domestic direct and indirect wholly-owned subsidiaries of j2 Cloud (as defined in(collectively, the Indenture agreement dated June 27, 2017, the “Indenture”“Guarantors”). If j2 Cloudthe Company or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an insignificant subsidiaryInsignificant Subsidiary (as defined in the Indenture)indenture pursuant to which the 4.625% Senior Notes were issued (the “Indenture”)), after the issue date, or any insignificant subsidiaryInsignificant Subsidiary ceases to fit within the definition of insignificant subsidiary,Insignificant Subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Issuers’Company’s obligations under the 6.0%4.625% Senior Notes.

The IssuersCompany may redeem some or all of the 6.0%4.625% Senior Notes at any time on or after JulyOctober 15, 20202025 at specified redemption prices plus accrued and unpaid interest, if any, to, but excluding the redemption date. Before July 15, 2020, in connection with certain equity offerings, the Issuers also may redeem up to 35% of the 6.0% Senior Notes at a price equal to 106.000% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, at any time prior to JulyOctober 15, 2020,2025, the IssuersCompany may redeem some or all of the 6.0%4.625% Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium.

The discount and deferred issuance costs are being amortized, at an effective interest rate of 4.7%, to interest expense through the maturity date.
The indenture governingIndenture contains covenants that restrict the 6.0% Senior Notes contains certain restrictive and other covenants applicable to j2 Cloud and subsidiaries designated as restricted subsidiaries including, but not limitedCompany’s ability to (i) pay dividends or make distributions on j2 Cloud’s capitalthe Company’s common stock or repurchase j2 Cloud’sthe Company’s capital stock; (ii) make certain restricted payments; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants includecontain certain exceptions. Violation of these covenants could result in a default which could result in the acceleration of outstanding amounts if such default is not cured or waived within the time periods outlined in the indenture. Restricted payments, specifically dividend payments are applicable only if j2 Cloudthe Company and subsidiaries designated as restricted subsidiaries hashave a net leverage ratio of greater than 3.03.5 to 1.0. In addition, if such net leverage ratio is in excess of 3.03.5 to 1.0, the restriction on restricted payments is subject to various
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
exceptions, including the total aggregate amount not exceeding the greater of (A) $250 million and (B) 50.0% of EBITDA for the most recently ended four fiscal quarter period ended immediately prior to such date for which internal financial statements are permitted up to $75 million. These contractual provisions did not, as of September 30, 2017, restrict j2 Cloud’s ability to pay dividends to j2 Global, Inc.available. The companyCompany is in compliance with its debt covenants for the 4.625% Senior Notes as of September 30, 2017.March 31, 2024.

AsCumulatively as of September 30, 2017,March 31, 2024, the estimated fair valueCompany has repurchased approximately $290 million in aggregate principal of the 6.0%its 4.625% Senior Notes. There were no repurchases of 4.625% Senior Notes was approximately $680.1 millionduring the three months ended March 31, 2024 and was based on the quoted market prices of debt instruments with similar terms, credit rating and maturities of the 6.0% Senior Notes which are Level 2 inputs (see Note 6 - Fair Value Measurements).March 31, 2023.

8.0% Senior Notes

On August 1, 2017, j2 Cloud redeemed all of its outstanding $250 million 8.0% senior unsecured notes due in 2020 for $265 million, including a redemption premium and relevant accrued interest which resulted in a loss on extinguishment of $8.0 million recorded which was recorded in Interest expense, net. j2 Cloud has satisfactorily discharged its obligations to the holders of such notes.



3.25%1.75% Convertible Notes

On June 10, 2014, j2 GlobalNovember 15, 2019, the Company issued $402.5$550.0 million aggregate principal amount of 3.25%1.75% convertible senior notes due June 15, 2029November 1, 2026 (the “Convertible“1.75% Convertible Notes”). The Company received proceeds of $537.1 million in cash, net of purchasers’ discounts and commissions and other debt issuance costs. A portion of the net proceeds were used to pay off all amounts outstanding under the then-existing credit facility. The 1.75% Convertible Notes bear interest at a rate of 3.25%1.75% per annum, payable semiannually in arrears on June 15May 1 and December 15November 1 of each year. Beginning with the six-month interest period commencingyear, beginning on June 15, 2021, the Company must pay contingent interest on the Convertible Notes during any six-month interest period if the trading price per $1,000 principal amount of the Convertible Notes for each of the five trading days immediately preceding the first day of such interest period equals or exceeds $1,300. Any contingent interest payable on theMay 1, 2020. The 1.75% Convertible Notes will be in addition to the regular interest payablemature on the Convertible Notes.

November 1, 2026, unless earlier converted or repurchased.
Holders may surrender their 1.75% Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding the maturity dateJuly 1, 2026 only if one or more ofunder the following conditions is satisfied:circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2014March 31, 2020 (and only during such calendar quarter), if the closinglast reported sale price of j2 Globalthe Company’s common stock for at least 20 trading days in(whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs is moregreater than 130% of the applicable conversion price of the 1.75% Convertible Notes on each such applicable trading day; (ii) during the five consecutive business day period following any ten10 consecutive trading day period in which the trading price for theper $1,000 principal amount of 1.75% Convertible Notes for each such trading day of the measurement period was less than 98% of the product of (a) the closinglast reported sale price of j2 Globalthe Company’s common stock on each such trading day and (b) the applicable conversion rate on each such trading day; or (iii) if j2 Global calls anyupon the occurrence of specified corporate events. On or all of the Convertible Notes for redemption, at any timeafter July 1, 2026, and prior to the close of business on the business day prior to the redemption date; (iv) upon the occurrence of specified corporate events; or (v) during either the period beginning on, and including, March 15, 2021 and ending on, but excluding, June 20, 2021 or the period beginning on, and including, March 15, 2029 and ending on, but excluding,immediately preceding the maturity date. j2 Globaldate, holders may convert all or any portion of their notes at any time, regardless of the foregoing circumstances. The Company will settle conversions of the 1.75% Convertible Notes by paying or delivering, as the case may be, cash, shares of j2 Globalthe Company’s common stock or a combination thereof at j2 Global’sthe Company’s election. The Company currently intends to satisfy its conversion obligation by paying and delivering a combination of cash and shares of the Company’s common stock, wherestock. Holders of the notes will have the right to require the Company to repurchase for cash will be usedall or any portion of their notes upon the occurrence of certain corporate events, subject to settle each $1,000certain conditions. As of principalMarch 31, 2024 and December 31, 2023, the remainder, if any, will be settled viamarket trigger conditions did not meet the Company’s common stock.conversion requirements of the 1.75% Convertible Notes and, accordingly, the 1.75% Convertible Notes are classified as long-term debt on our Condensed Consolidated Balance Sheets.

For the three months ended September 30, 2017,As of March 31, 2024, the conversion rate is 14.56459.3783 shares of j2 Globalthe Company’s common stock for each $1,000 principal amount of 1.75% Convertible Notes (or 5,158,071 shares), which represents a conversion price of approximately $68.66$106.63 per share of j2 Globalthe Company’s common stock. The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the 1.75% Convertible Notes, but will not be adjusted for accrued interest. In addition, following certain corporate events that occur on or prior to June 20, 2021, j2 Globalupon the occurrence of a “Make-Whole Fundamental Change” (as defined in the 1.75% Convertible Note Indenture), the Company will increase the conversion rate for a holder that elects to convert its 1.75% Convertible Notes in connection with such a corporate event.event in certain circumstances.

j2 GlobalThe Company may not redeem the 1.75% Convertible Notes prior to June 20, 2021. On or after June 20, 2021, j2 Global may redeem for cash all or part of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accruedNovember 1, 2026, and unpaid interest to, but excluding, the redemption date. Nono sinking fund is provided for the 1.75% Convertible Notes.

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

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

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ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The following table provides the components of interest expense related to the 1.75% Convertible Notes (in thousands):
Three months ended March 31,
20242023
Contractual interest expense$2,406 $2,406 
Amortization of deferred issuance costs470 466 
Total interest expense related to 1.75% Convertible Notes$2,876 $2,872 
Accounting for the 1.75% Convertible Notes

In accordanceconnection with ASC 470-20, Debt with Conversionthe issuance of the 1.75% Convertible Notes, the Company incurred $12.9 million in deferred issuance costs, which primarily consisted of the underwriters’ discount, legal and Other Options, convertible debt that can be settled for cash is required to be separated intoother professional service fees. Of the liability and equity component attotal deferred issuance with each component assigned a value. The value assignedcosts incurred, $10.1 million was attributable to the liability component and is being amortized at an effective interest rate of 5.5%, to interest expense through the estimated fair value, asmaturity date. The remaining $2.8 million of the deferred issuance date, of similar debt without the conversion feature. The difference between the cash proceeds and estimated fair value of the liability component, representing the value of the conversion premium assigned tocosts was netted with the equity component is recorded as a debt discount onin additional paid-in capital at the issuance date. This debt discount is amortized to interest expenseUpon adoption of ASU 2020-06 using the effective interest method overmodified retrospective approach, the periodCompany reclassified the $2.8 million from additional paid-in-capital to long-term liability and recorded a cumulative adjustment to retained earnings for amortization from the issuance date through January 1, 2022.
Credit Agreement
On April 7, 2021, the first stated repurchaseCompany entered into a $100.0 million credit agreement (as amended, the “Credit Agreement”). Subject to certain conditions 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 March 31, 2024, 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 on June 15, 2021.

j2 Global estimated the borrowing rates of similar debt without the conversion feature at originationany fiscal quarter not to be 5.79%exceed 4.00:1.00 for the Convertible NotesCompany and determined the debt discount to be $59.0 million. Asits restricted subsidiaries and (ii) a result, a conversion premium after tax of $37.7 million was recorded in additional paid-in capital. The aggregate debt discount is amortizedminimum interest coverage ratio 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 Convertible Notes using an interest ratelast date of 5.81%. As of September 30, 2017, the remaining period over which the unamortized debt discount will be amortized is 3.7 years.

The Convertible Notes are carried at face valueany fiscal quarter not less any unamortized debt discount and debt issuance costs. The fair value of the Convertible Notes at each balance sheet date is determined based on recent quoted market prices or dealer quotesthan 3.00:1.00 for the Convertible Notes, which are Level 1 inputs (see Note 6 - Fair Value Measurements). If such informationCompany 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 not available,in compliance with its debt covenants for 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 September 30, 2017 and December 31, 2016, the estimated fair value of the Convertible Notes was approximately $498.6 million and $516.8 million, respectively.

Long-term debtCredit Agreement as of September 30, 2017 and DecemberMarch 31, 2016 consists of the following (in thousands):2024.

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
9.8.Commitments and Contingencies

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

On February 17, 2011, Emmanuel Pantelakis (“Pantelakis”) 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.



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

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

On January 21, 2016, Davis Neurology, P.A.8, 2020, Jeffrey Garcia filed a putative class action lawsuit against two j2 Global affiliatesthe Company in the Circuit Court for the CountyCentral District of Pope, State of Arkansas (58-cv-2016-40)California (20-cv-06096), alleging violations of federal securities laws. The court appointed a lead plaintiff. The Company moved to dismiss the TCPA.consolidated class action complaint. The case was ultimately removedcourt granted the motion to dismiss and the U.S. Districtplaintiff 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 appealed the dismissal. On April 19, 2024, the Ninth Circuit Court forof Appeals affirmed the Easterndismissal.
On December 11, 2020, Danning Huang filed a lawsuit in the District of Arkansas (the “EasternDelaware (20-cv-01687-LPS) asserting derivative claims against directors of the Company and other third parties. The lawsuit alleges violations of Section 14(a), Section 10(b), Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934, as well as breach of fiduciary duty, unjust enrichment and abuse of control.
On March 24, 2021, Fritz Ringling filed a lawsuit in the District of Arkansas”) (No. 4:16-cv-00682). On June 6, 2016,Delaware (21-cv-00421-UNA) asserting substantially similar derivative claims, and on April 8, 2021, the j2district court consolidated the two actions under the caption In re J2 Global affiliates filed a motion for judgment onStockholder Derivative Litigation. No.: 20-cv-01687-LPS. As part of the pleadings. On March 20, 2017,settlement of the Eastern District of Arkansas dismissed all claimsChancery Court Derivative Action described above, the Company and its directors and officers intend to defend against the j2 Global affiliates. On April 17, 2017, Davis Neurology filed a notice of appeal to the Federal Circuit (No. 17-1820). remaining claims in these other actions.
The appeal is pending.

j2 GlobalCompany does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing reserves,accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could have a material effect on j2 Global’sthe Company’s consolidated financial position, results of operations, or cash flows in a particular period.
The Company has not accrued for any material loss contingencies relating to these legal proceedings because materially unfavorable outcomes are not considered probable by management. It is the Company’s policy to expense as incurred legal fees related to various litigations.
Non-Income Related Taxes
As a provider of cloud services for business, theThe Company does not provide telecommunications services. Thus, it believes that its businesscollect and its users (by using the Company’s services) are generally not subject to variousremit sales and use, telecommunication, taxes. Moreover,or similar taxes and fees in certain jurisdictions where the Company generally doesbelieves such taxes are not believe that its business and its users (by using the Company’s services) are subject to other indirect taxes, such as sales, business tax and gross receipt tax. However, several state and municipal taxing authorities have challenged these beliefs and have and may continue to audit and assess the Company’s business and operations with respect to telecommunicationsapplicable or legally required. Several states and other indirect taxes.
On February 24, 2016, President Obama signed into law H.R. 644,taxing jurisdictions have presented or threatened the “Trade FacilitationCompany with assessments, alleging that the Company is required to collect and Trade Enforcement Act of 2015”, which included a provision to permanently ban state and local authorities from imposing access or discriminatoryremit such taxes on the Internet. The new law allows “grandfathered” states and local authorities to continue their existing taxes on Internet access through June 2020.
there. The Company is currently under audit or is subject to audit for indirect taxes in severalvarious states, municipalities, and municipalities including New York State, Massachusetts,foreign jurisdictions. The Company recognizes a liability for these matters when it is probable that an obligation exists and the Cityamount can be reasonably estimated based on all relevant information that is available at each reporting period.
The Company established reserves for these matters of Los Angeles. On March 3, 2017, the New York State Department$28.1 million as of Taxation and Finance issued a notice of assessment to a j2 Global affiliate for sales and use tax for the periodeach of March 1, 2009 through February 28, 2014. The j2 Global affiliate31, 2024 and December 31, 2023, respectively, which are included in ‘Accounts payable’ and ‘Other long-term liabilities’ on the Condensed Consolidated Balance Sheet. It is reviewing the Department’s notice of assessment. On August 8, 2017, the Ohio audit was concluded with immaterial changes. We have reserved for potential adjustments to our accrual of indirect taxesreasonably possible that may result from examinations by or any negotiated agreements with these tax authorities and we believe that the final outcome of these examinations or agreements will notadditional liabilities could be incurred resulting in additional expense, which could have a material effect onimpact to our results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of benefits in the period we determine the liabilities are no longer necessary. If our estimated indirect tax liabilities are less than the ultimate assessment, it would result in a further charge to expense.

financial results.


10.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
9.Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate.rate adjusted for discrete interim period tax impacts. Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. j2 Global’s annual effective tax rate is normally lower than the 35% U.S. federal statutory rate and applicable apportioned state tax rates primarily due to anticipated earnings of the Company’s subsidiaries outside of the U.S. in jurisdictions where the Company’s effective tax rate is lower than in the U.S. The Company’s effective tax rate was 22.1%42.2% and 25.8%(65.6)% for the three months ended September 30, 2017March 31, 2024 and 2016, respectively and 23.7% and 28.7%2023, respectively.
The Company’s effective tax rate for the ninethree months ended September 30, 2017 and 2016, respectively. j2 Global does not provideMarch 31, 2024 was impacted disproportionately by the recognition of a valuation allowance against a portion of its U.S. capital loss carryforwards, which resulted in a discrete tax charge of $3.2 million.
The Company’s effective tax rate for U.S. income taxesthe three months ended March 31, 2023 was impacted disproportionately due to the unrealized loss on the undistributed earningsCompany’s investment in Consensus, net of the Company’s foreign operations becausegain on investment, during the first quarter of 2023, which resulted in a discrete tax benefit of approximately $5.0 million. Additionally, the Company intends to permanently reinvest such earnings in foreign jurisdictions and any determinationrecognized a discrete tax benefit of the amount of unrecognized deferred tax liabilityapproximately $1.0 million related to these earnings is not practicable. Income before income taxes included income from domestic operationsthe release of $13.7 million and $57.2 millionreserves for the nine months ended September 30, 2017 and 2016, respectively, and income from foreign operations of $103.7 million and $96.0 million for the nine months ended September 30, 2017 and 2016, respectively.

uncertain tax positions.
As of September 30, 2017March 31, 2024 and December 31, 2016,2023, the Company had $48.7$36.6 million and $46.5$36.1 million, respectively, in liabilities for uncertain income tax positions.positions included in ‘Other long-term liabilities’ on the Condensed Consolidated Balance Sheets. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s consolidated statementin our Condensed Consolidated Statement of income.

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

Operations.
Certain taxes are prepaid during the year and, where appropriate, included within prepaidin ‘Prepaid expenses and other current assets onassets’ in our Condensed Consolidated Balance Sheets. As of March 31, 2024 and December 31, 2023, the consolidated balance sheet. The Company’s prepaid taxes were $9.2$3.4 million and zero at September 30, 2017 and December 31, 2016,$4.7 million, respectively.


Income Tax Audits:

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

j2 Global is under income tax audit by the California Franchise Tax Board (the “FTB”) for its tax years 2012 and 2013. The FTB, however, has agreed to suspend its audit for 2012 and 2013 pending the outcome of the IRS audit for such tax years.

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

The Company was notified on September 6, 2017 that the Massachusetts Department of Revenue would be auditing tax years 2014 and 2015.
It is reasonably possible that these audits may conclude in the next 12 months and that the uncertain tax positions the Company has recorded in relation to these tax years may change compared to the liabilities recorded for these periods. If the recorded uncertain tax positions are inadequate to cover the associated tax liabilities, the Company would be required to record additional tax expense in the relevant period, which could be material. If the recorded uncertain tax positions are adequate to cover the associated tax liabilities, the Company would be required to record any excess as a reduction in tax expense in the relevant period, which could be material. However, it is not currently possible to estimate the amount, if any, of such change.

11.10.Stockholders’ Equity

Common Stock Repurchase Program

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



In July 2016,. The Company entered into certain Rule 10b5-1 trading plans to execute repurchases under the Company acquired2020 Program. During the three months ended March 31, 2024 and subsequently retired 935,2312023, no shares were repurchased under the 2020 Program. Cumulatively as of j2 Global common stock in connection withMarch 31, 2024, 5,258,692 shares were repurchased under the acquisition2020 Program, at an aggregate cost of Integrated Global Concepts, Inc.$401.8 million (including excise tax). As a result of the purchase of j2 Global common stock, the Company’s Board of Directors approved a reduction inrepurchases, the number of shares available for purchase underof the 2012 Program by the same amount leaving 1,938,689 shares of j2 GlobalCompany’s common stock available for purchase under this program. During the nine month period ended September 30, 2017, we repurchased zero shares under this program. Cumulatively at September 30, 2017, 2.1 million shares were repurchased at an aggregate costas of $58.6 million (including an immaterial amount of commission fees).March 31, 2024 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.stock and restricted stock units. During the three month periodmonths ended September 30, 2017,March 31, 2024 and 2023, the Company purchased 14,178and retired 58,237 and 36,652 shares at an aggregate cost of approximately $3.9 million and $2.9 million, respectively, from plan participants for this purpose.


Dividends
11.Share-Based Compensation
The following is a summary of each dividend declared during fiscal year 2017 and 2016:
Declaration Date Dividend per Common Share Record Date Payment Date
February 10, 2016 $0.3250
 February 23, 2016 March 10, 2016
May 5, 2016 $0.3350
 May 18, 2016 June 2, 2016
August 2, 2016 $0.3450
 August 17, 2016 September 1, 2016
November 1, 2016 $0.3550
 November 18, 2016 December 5, 2016
February 9, 2017 $0.3650
 February 22, 2017 March 9, 2017
May 4, 2017 $0.3750
 May 19, 2017 June 2, 2017
August 2, 2017 $0.3850
 August 14, 2017 September 1, 2017

Future dividends are subject to Board approval.

12.Stock Options and Employee Stock Purchase Plan

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

The 2007 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. 4,500,000 shares of j2 Global common stock are authorized to be used for 2007 Plan purposes. Options under the 2007 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the fair market value of j2 Global’s common stock on the date of grant for incentive stock options and not less than 85% of the fair market value of j2 Global’s common stock on the date of grant for non-statutory stock options. As of September 30, 2017, 313,675 shares underlying options and 13,140 shares of restricted units were outstanding under the 2007 Plan.

The 2015 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, and other share-based awards and is intended as a successor plan to the 2007 Stock Plan since no further grants will be made under the 2007 Stock Plan.awards. 4,200,000 shares of j2 Globalthe Company’s common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of j2 Global’sthe Company’s common stock subject to the option on the date the option is granted. As of September 30, 2017, 62,000March 31, 2024, 435,135 shares underlying options and 29,660726,367 shares of restricted stock units were outstanding under the 2015 Plan. At March 31, 2024, there were 126,565 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2015 Plan.


All stock option grants are approved by “outside directors” within the meaning of Internal Revenue Code Section 162(m).
-22-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

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

The total intrinsic valueseffects of options exercisedshare-based compensation expense in the Condensed Consolidated Statements of Operations during the nine months ended September 30, 2017 and 2016 were $2.1 million and $5.1 million, respectively.periods presented (in thousands):
Three months ended March 31,
20242023
Direct costs$61 $76 
Sales and marketing758 924 
Research, development, and engineering1,090 783 
General, administrative, and other related costs6,963 6,619 
Total share-based compensation expense$8,872 $8,402 
The Company recognized $40,000 and $0.1 million of compensation expense related to stock options for the three months ended September 30, 2017 and 2016, respectively, and $0.1 million and $0.3 million for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017 and December 31, 2016, unrecognized stock compensation related to non-vested stock options granted under each of the share-based compensation plans approximated $0.5 million and $0.7 million, respectively. Unrecognized stock compensation expense related to non-vested stock options granted under these plans is expected to be recognized ratably over a weighted-average period of 2.6 years (i.e., the remaining requisite service period).

Fair Value Disclosure
j2 Global uses the Black-Scholes option pricing model to calculate the fair value of each option grant. The expected volatility is based on historical volatility of the Company’s common stock. The Company estimates the expected term based upon the historical exercise behavior of our employees. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 14.07% and 12.58% as of September 30, 2017 and 2016, respectively.

Restricted Stock and Restricted Stock Units
j2 GlobalThe Company has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to certain share-based compensation plans. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Beginning in fiscal year 2012, vestingVesting periods are approximately one year for awards to members of the Company’s Board of Directors, and fivegenerally three to four years for senior staff (excluding market-based awards discussed below). and three to eight years for the Chief Executive Officer. The Company granted 347,275 and 271,614 shares of restricted stock units (excluding awards with market conditions below) (“RSUs”) during the three months ended March 31, 2024 and 2023, respectively.



Restricted Stock - Awards with Market Conditions

In May 2017,The Company has awarded certain key employees were granted market-based restricted stock awards. The(“PSAs”) and market-based restricted stock units (“PSUs”) pursuant to the 2015 Plan. Market-based awards granted prior to 2024 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 lookback20-day and 30-day look back (trading days). Stock-basedDuring the three months ended March 31, 2023, the Company awarded 167,606 PSUs at stock price targets ranging from $83.61 to $103.76 per share.
During the three months ended March 31, 2024, the Company awarded 308,970 equity classified PSUs that vest in shares of the Company’s stock ranging from 0% to 200% of the award based on the Company’s attainment of a relative Total Shareholder Return (“TSR”) target compared to the TSR of all listed companies in a market index over the respective one, two, and three-year performance periods. 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 and all listed companies in a market index achieving the relative TSR targets.
Share-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the nine months ended September 30, 2017 and 2016, the Company awarded 85,825 and 106,780 market-based restricted stock awards, respectively.
The per share weighted average grant-date fair values ofvalue for the market-based restricted stock awardsPSUs granted during the ninethree months ended September 30, 2017March 31, 2024 and 2023 were $72.20.$87.17 and $70.07, respectively.


-23-

ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The assumptions used in determining the weighted-average fair values of market-based restricted stock awardsPSUs granted have been estimated utilizing the following assumptions:are as follows:
Three months ended March 31,
20242023
Underlying stock price at valuation date$66.88 $77.80 
Expected volatility32.9 %32.0 %
Risk-free interest rate4.3 %4.1 %
 September 30, 2017
Underlying stock price at valuation date$91.17
Expected volatility29.0%
Risk-free interest rate2.17%


Restricted stock award activity for the ninethree months ended September 30, 2017March 31, 2024 is set forth below:
 Shares 
Weighted-Average
Grant-Date
Fair Value
Nonvested at January 1, 2017705,015
 $41.40
Granted287,920
 61.29
Vested(216,410) 45.27
Canceled(1,850) 87.68
Nonvested at September 30, 2017774,675
 $47.60
RSAsPSAs
Number of
Shares
Weighted Average
Grant Date
Fair Value
Number of
Shares
Weighted Average
Grant Date
Fair Value
Nonvested at January 1, 202495,718$70.17 163,181$36.27 
Vested(36,330)70.92 — — 
Forfeited(154)77.75 — — 
Nonvested at March 31, 202459,234 $69.69 163,181 $36.27 
  
Restricted stock unit award activity for the ninethree months ended September 30, 2017March 31, 2024 is set forth below:
RSUsPSUs
Number of
Shares

Weighted Average Grant Date Fair Value
Number of Shares (1)
Weighted Average Grant Date Fair Value
Outstanding at January 1, 2024506,425 $88.36 270,772 $77.09 
Granted347,275 66.87308,970 87.17
Vested(114,635)86.29— — 
Forfeited(12,698)82.28(6,015)75.96
Outstanding at March 31, 2024726,367 $78.49 573,727 $82.53 
 Number of
Shares		 Weighted-Average
Remaining
Contractual
Term (in years)		 Aggregate
Intrinsic
Value
Outstanding at January 1, 201751,950
    
Granted11,100
    
Vested(13,570)    
Canceled(6,680)    
Outstanding at September 30, 201742,800
 1.9 $3,162,064
Vested and expected to vest at September 30, 201732,427
 1.7 $2,395,693

(1)Represents the number of shares at 100% achievement.
The Company recognized $4.4 million and $3.6 million of compensation expense related to restricted stock and restricted stock units for the three months ended September 30, 2017 and 2016, respectively, and $13.5 million and $9.6 million for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017 and DecemberMarch 31, 2016,2024, the Company had unrecognized share-based compensation cost of approximately $46.7$84.1 million and $37.9 million, respectively, associated with these awards.restricted stock awards and restricted stock units. This cost is expected to be recognized over a weighted-average period of 3.71.8 years for awardsRSAs and 3.3PSAs and 2.6 years for units.RSUs and PSUs.



-24-


Employee Stock Purchase Plan
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The Purchase Plan provides for the issuance of a maximum of two million shares of the Company’s common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of j2 Global common stock at certain plan-defined dates. The price of the j2 Global common stock purchased under the Purchase Plan for the offering periods is equal to 95% of the fair market value of the j2 Global common stock at the end of the offering period. For the nine months ended September 30, 2017 and 2016, 2,373 and 2,996 shares were purchased under the plan, respectively. Cash received upon the issuance of j2 Global common stock under the Purchase Plan was $194,000 and $191,000 for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, 1,624,153 shares were available under the Purchase Plan for future issuance.

13.12.Earnings Per Share
The components of basic and diluted earnings (loss) per share are as follows (in thousands, except share and per share data):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Numerator for basic and diluted net income per common share:       
Net income attributable to j2 Global, Inc. common shareholders$32,358
 $45,569
 $89,554
 $109,281
Net income available to participating securities (a)
(420) (718) (1,128) (1,610)
Net income available to j2 Global, Inc. common shareholders$31,938
 $44,851
 $88,426
 $107,671
Denominator:       
Weighted-average outstanding shares of common stock47,609,819
 47,310,011
 47,540,593
 47,775,798
Dilutive effect of:       
Equity incentive plans218,782
 184,733
 232,506
 208,974
Convertible debt (b)
692,481
 —
 972,581
 12,902
Common stock and common stock equivalents48,521,082
 47,494,744
 48,745,680
 47,997,674
Net income per share:       
Basic$0.67
 $0.95
 $1.86
 $2.25
Diluted$0.66
 $0.94
 $1.81
 $2.24

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

(b)
Represents the incremental shares issuable upon conversion of the Convertible Notes due June 15, 2029 by applying the treasury stock method when the average stock price exceeds the conversion price of the Convertible Notes (see Note 8 - Long Term Debt).

Three months ended March 31,
20242023
Numerator for basic and diluted net income (loss) per common share:
Net income (loss)$10,627 $(7,627)
Plus: 1.75% Convertible Notes interest expense (after-tax)— — 
Net income (loss) available to the Company’s common shareholders$10,627 $(7,627)
Denominator:
Basic weighted-average outstanding shares of common stock45,860,033 46,987,249 
Diluted effect of:
Equity incentive plans
95,332 — 
Convertible debt— — 
Diluted weighted-average outstanding shares of common stock45,955,365 46,987,249 
Net income (loss) per share:
Basic$0.23 $(0.16)
Diluted$0.23 $(0.16)
For the three months ended September 30, 2017March 31, 2024 and 2016,2023, there were zero846,160 and 62,0001,830,097 shares, respectively, of stock options outstanding, respectively, whichand restricted stock excluded from the calculation of diluted shares as they were anti-dilutive primarily due to the average stock price during the 2024 period and the net loss during the 2023 period. During each of the three months ended March 31, 2024 and 2023, 5,158,071, shares related to convertible debt were excluded from diluted shares because they were anti-dilutive under the computation ofif-converted method for the diluted earningsnet income per share because the exercise prices were greater than the average market pricecalculation of the common stock. For the nine months ended September 30, 2017 and 2016, there were zero and 62,000 options outstanding, respectively, which were excluded from the computation of diluted earnings per share because the exercise prices were greater than the average market price of the common stock.convertible debt instrument.




14.Segment Information

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

Martech.
The Company’s Business Cloud Services segment is driven primarily by subscription revenues thataccounting policies of the businesses are relatively higher margin, stable and predictable from quarter to quarter with some seasonal weaknessthe same as those described in the fourth quarter.Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2024. The Business Cloud Services segment also includes the results of our IP licensing business, which can vary dramatically in both revenuesCompany evaluates performance based on revenue and profitabilityprofit or loss from period to period. The Company’s Digital Media segment is driven primarily by advertising revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter.operations.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Information on reportable segments and reconciliation to consolidated income from operations is as follows (in thousands):
Three months ended March 31,
20242023
Revenue by reportable segment:
Digital Media$239,052 $234,211 
Cybersecurity and Martech75,452 73,016 
Elimination of inter-segment revenues (1)
(19)(85)
Total segment revenues314,485 307,142 
Corporate— — 
Total revenues$314,485 $307,142 
Operating costs and expenses by reportable segment (3):
Digital Media207,447 205,742 
Cybersecurity and Martech56,043 61,413 
Elimination of inter-segment operating expenses(19)(85)
Total segment operating expenses263,471 267,070 
Corporate (2)
15,153 13,757 
Total operating costs and expenses278,624 280,827 
Operating income by reportable segment:
Digital Media operating income31,605 28,469 
Cybersecurity and Martech operating income19,409 11,603 
Total segment operating income51,014 40,072 
Corporate (2)
(15,153)(13,757)
Income from operations$35,861 $26,315 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Revenues by segment:       
Business Cloud Services$145,787
 $143,342
 $432,039
 $423,941
Digital Media127,865
 66,819
 369,470
 198,613
Elimination of inter-segment revenues(36) (45) (51) (136)
Total revenues273,616
 210,116
 801,458
 622,418
        
Direct costs by segment(1):
       
Business Cloud Services89,662
 90,485
 261,515
 268,333
Digital Media115,499
 52,887
 350,467
 165,398
Direct costs by segment(1):
205,161
 143,372
 611,982
 433,731
        
Business Cloud Services operating income(2)
56,125
 52,857
 170,524
 155,608
Digital Media operating income12,366
 13,932
 19,003
 33,215
Segment operating income68,491
 66,789
 189,527
 188,823
        
Global operating costs(2)
5,534
 4,667
 20,035
 14,418
Income from operations$62,957
 $62,122
 $169,492
 $174,405
        
(1) Direct costs for each segment include cost of revenues and other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expense, depreciation and amortization and other administrative expenses.
(2) Global operating costs include general and administrative and other corporate expenses that are managed on a global basis and that are not directly attributable to any particular segment.
(1)Inter-segment revenues relate to the Digital Media reportable segment.


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

The Company’s Business Cloud Services segment consists of several services which have similar economic characteristics, including the nature of the services and their production processes, the type of customers, as well as the methods used to distribute these services.

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



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

j2 Global maintains operations in the U.S., Canada, Ireland, Japan(2)Corporate includes costs associated with general, administrative, and other countries. Geographic information aboutrelated costs that are managed on a global basis and that are not directly attributable to any particular segment.
(3)Operating expenses for each segment include direct costs and other operating expenses that are directly attributable to the U.S.segment, such as employee compensation expense, sales and allmarketing expenses, engineering and network operations expense, depreciation and amortization, and other countries for the reporting periods is presented below. Such information attributes revenues based on jurisdictions where revenues are reportedadministrative expenses.


14.Supplemental Cash Flow Information
Supplemental data (in thousands).:
Three months ended March 31,
20242023
Interest paid$— $— 
Income taxes paid, net of refunds$6,511 $5,329 

-26-

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
 September 30,
2017		 December 31,
2016
Long-lived assets:   
United States$394,102
 $453,053
All other countries88,088
 93,430
Total$482,190
 $546,483

15.Accumulated Other Comprehensive (Loss) Income

The following table summarizes the changes in accumulated balances of other comprehensive income,loss (income), net of tax, for the three months ended September 30, 2017March 31, 2024 (in thousands):
Unrealized Gains (Losses) on InvestmentsForeign Currency TranslationTotal
Balance as of January 1, 2024$537 $(72,157)$(71,620)
Other comprehensive loss, net of tax(63)(6,530)(6,593)
Balance as of March 31, 2024$474 $(78,687)$(78,213)
 Unrealized Gains (Losses) on Investments Foreign Currency Translation Total
Beginning balance$—
 $(38,736) $(38,736)
     Other comprehensive income before reclassifications—
 7,703
 7,703
Net current period other comprehensive income—
 7,703
 7,703
Ending balance$—
 $(31,033) $(31,033)



The following table summarizes the changes inThere were no reclassifications out of accumulated balances of other comprehensive income, net of tax,loss for the ninethree months ended September 30, 2017 (in thousands):March 31, 2024 and 2023, respectively.

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

16.Subsequent Events

Event
On October 5, 2017, the Company completed the sale of Tea Leaves, a subsidiary of Everyday Health, Inc. within the Digital Media segment, for a purchase price of approximately $90.0 million (subject to valuation) consisting of a combination of cash and various equity securities. The Company is currently determining the financial impact to the statement of operations which will be recorded in the fourth quarter 2017. The Company expects to record a gain from this transaction.

On October 12, 2017, in a cash transaction including an earn-out, the Company acquired all the issued capital of Humble Bundle, Inc., a digital storefront for video games based in California.

On October 31, 2017,March 22, 2024, the Company’s Board of Directors approved a quarterly cash dividendthe Ziff Davis, Inc. 2024 Equity Incentive Plan (the “2024 Plan”), subject to stockholders’ approval, to replace the 2015 Plan, which stockholders previously approved and which was set to expire on February 10, 2025, in accordance with its terms. On May 7, 2024, at the Company’s annual meeting of $0.3950 per share of j2 Global common stock payable on December 5, 2017 to allstockholders, the 2024 Plan was approved by the stockholders of record asthe Company and will expire on March 21, 2034, unless earlier terminated by the Board of Directors. As a result, the close of business on November 17, 2017.2015 Plan was terminated effective May 7, 2024.

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

Forward-Looking Information

In addition to historical information, we have also madecertain statements included in this Quarterly Report on Form 10-Q may be forward-looking statements, in this report.including statements regarding the intent, belief or current expectations of the Company. These statements may include those concerning our possible or assumed future results of operations, business, strategy and current and future acquisitions, as well as the assumptions on which such statements are based. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future resultsgenerally are identified by use of operations. Forward-looking statements also include those preceded or followed by the words “anticipates,” “believes,” “estimates,” “hopes”“hopes,” “may,” “will,” “seeks,” “protects,” “potential,” “predicts,” “expects,” “plans,” “intends,” “would,” “could,” “should,” or similar expressions.expressions, although not all forward-looking statements contain these identifying words. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed below, the risk factors discussed in Part II, Item 1A - “Risk Factors” of this Quarterly Report on Form 10-Q (if any) and in Part I, Item 1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 20162023 (together, the “Risk Factors”), and the factors discussed in the sectionPart I, Item 3 in this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures About Market Risk.”Risk” and any risks and uncertainties identified in our other filings with the SEC, as such risks, uncertainties and other important factors may be updated from time to time in our subsequent reports. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions and speak only as of the date hereof.they are made. We undertake no obligation to revise, update or publicly release the results of any revision to these forward-looking statements. Readers should carefully reviewstatements to reflect changed assumptions, new information or the Risk Factors and the risk factors set forth in other documents we file from time to time with the SEC.
occurrence of unanticipated events, unless required by law.
Some factors that could cause actual results to differ materially from those anticipated in these forward-looking statements include, but are not limited to, our ability and intention to:

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

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

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

◦Generate sufficient cash flow to make interest and debt payments, reinvest in our business, and pursue desired activities and businesses plans while satisfying restrictive covenants relating to debt obligations;
◦Acquire businesses on acceptable terms, execute on our investment strategies, successfully manage our growth, and integrate and realize anticipated synergies from such acquisitions;
◦Continue to expand our businesses and operations internationally in the wake of numerous risks, including adverse currency fluctuations, difficulty in staffing and managing international operations, higher operating costs as a percentage of revenues, or the implementation of adverse regulations;
◦Maintain our financial position, operating results and cash flows in the event that we incur new or unanticipated costs or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added, and telecommunication taxes;
◦Manage certain risks related to the unauthorized use of our content and the infringement of our intellectual property rights by developers and users of generative artificial intelligence (“AI”);
◦Prevent system failures, security breaches, and other technological issues;
◦Accurately estimate the assumptions underlying our effective worldwide tax rate;
◦Maintain favorable relationships with critical third-party vendors that are financially stable;
◦Create compelling digital media content facilitating increased traffic and advertising levels and additional advertisers or an increase in advertising spend, and effectively target digital media advertisements to desired audiences;
◦Manage certain risks inherent to our business, such as costs associated with fraudulent activity, system failure, or security breach; effectively maintaining and managing our billing systems; the time and resources required to
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manage our legal proceedings; liability for legal and other claims; or adhering to our internal controls and procedures;
◦Compete with other similar providers with regard to price, service, and functionality;
◦Achieve business and financial objectives in light of burdensome domestic and international telecommunications, internet, or other regulations, including regulations related to data privacy, access, security, retention, and sharing;
◦Successfully adapt to technological changes and diversify services and related revenues at acceptable levels of financial return;
◦Successfully develop and protect our intellectual property, both domestically and internationally, including our brands, content, copyrights, patents, trademarks, and domain names from infringement by third parties, and avoid infringing upon the proprietary rights of others;
◦Manage certain risks associated with environmental, social, and governmental matters, including related reporting obligations, that could adversely affect our reputation and performance;
◦Recruit and retain key personnel and maintain the beneficial aspects of our corporate culture globally;
◦Meet our publicly announced guidance or other expectations about our business and future operating results; and
◦Avoid disruptions to our operations, financial position, and reputation as a result of the collapse of certain banks and potentially other financial institutions.
In addition, other factors that could cause actual results to differ materially from those anticipated in these forward-looking statements or materially impact our financial results could be materially impacted byinclude the risks associated with new accounting pronouncements.pronouncements, as well as those associated with natural disasters, public health crises, pandemics, and other catastrophic events outside of our control.


Overview

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

businesses. Our Cybersecurity and Martech business provides cloud-based subscription and license services to consumers and businesses including cybersecurity, privacy, and marketing technology.
Our Business Cloud Services Division generatesconsolidated revenues are currently generated primarily from customer subscriptiontwo basic business models, each with different financial profiles and usage fees and from IP licensing fees.variability. Our Digital Media Division generatesbusiness is driven primarily by advertising revenues, has relatively higher sales and marketing expense, and has seasonal strength in the fourth quarter. Our Cybersecurity and Martech business is driven primarily by subscription revenues with relatively stable and predictable margins from advertising and sponsorship, subscription and usage fees, performance marketing and licensing fees.
quarter to quarter. In addition to growing our businessesbusiness organically, on a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technology andtechnologies, acquire skilled personnel.
Our consolidated revenues are currently generated from three basic business models, each with different financial profilespersonnel, and variability. Our Business Cloud Services Division is driven primarily by subscription revenues that are relatively higher margin, stable and predictable from quarter to quarter with some seasonal weakness in the fourth quarter. The Business Cloud Services Division also includes the results of our IP licensing business, which can vary dramatically in both revenues and profitability from period to period. Our Digital Media Division is driven primarily by advertising revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter.enter into new markets. We continue to pursue additional acquisitions, which may include companies operating under business models that differ from those we operate under today. Such acquisitions could impact our consolidated profit margins and the variability of our revenues.
j2 Global was incorporated in 2014
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Revenue Overview
Revenues from customers classified by revenue source are as follows (in thousands):
Three months ended March 31,
20242023
Digital Media
Advertising and performance marketing$156,096 $156,082 
Subscription and licensing73,467 69,148 
Other9,489 8,981 
Total Digital Media revenues$239,052 $234,211 
Cybersecurity and Martech
Subscription and licensing$75,452 $73,016 
Total Cybersecurity and Martech revenues$75,452 $73,016 
Elimination of inter-segment revenues(19)(85)
Total Revenues$314,485 $307,142 
Performance Metrics
We use certain metrics to generally assess the operational and financial performance of our businesses. For our advertising and performance marketing businesses, net advertising revenue retention is an indicator of our ability to retain the spend of our existing customers year over year, which we view as a Delaware corporation throughreflection of the creationeffectiveness of a new holding company structure,our advertising platform. Similarly, we monitor the number of our customers and the revenue per customer, as defined below, as these metrics provide further details related to our Business Cloud Services segment, operated by our wholly-owned subsidiary, j2 Cloud Services, LLC (formerly j2 Cloud Services, Inc.), and its subsidiaries, was founded in 1995. We manage our operations through two business segments: Business Cloud Services and Digital Media. Information regardingreported revenue and operating income attributablecontribute to eachcertain of our reportable segments is included within Note 14 - Segment Information of the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.


Business Cloud Services Segment Performance Metrics

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

(1)
Quarterly ARPU is calculated using our standard convention of applying the average of the quarter’s beginning and ending base to the total revenue for the quarter. We believe ARPU provides investors an understanding of the average monthly revenues we recognize associated with each Cloud Business Customer. As ARPU varies based on fixed subscription fee and variable usage components, we believe it can serve as a measure by which investors can evaluate trends in the types of services, levels of services and the usage levels of those services across our Cloud Business Customer base.

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

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


Digital Media Segment Performance Metrics

business planning decisions.
The following table sets forth certain key operating metrics for our Digital Media segmentadvertising and performance marketing business for the three and nine months ended September 30, 2017March 31, 2024 and 2016 (in millions):2023:
Three months ended March 31,
20242023
Net advertising and performance marketing revenue retention (1)
91.6%91.2%
Customers (2)
1,6311,737
Quarterly revenue per customer (3)
$95,695$89,857
(1)    Net advertising and performance marketing revenue retention equals (i) the trailing twelve months revenue recognized related to prior year customers in the current year period (excluding revenue from acquisitions during the stub period) divided by (ii) the trailing twelve months revenue recognized related to prior year customers in the prior year period (excluding revenue from acquisitions during the stub period). This excludes customers that generated less than $10,000 of revenue in the measurement period.
(2)    Excludes customers that spent less than $2,500 in the quarter.
(3)    Represents total gross quarterly advertising and performance marketing revenues divided by customers as defined in footnote (2).

For our subscription and licensing businesses, the number of subscribers that we serve is an indicator of our customer retention and growth. The average monthly revenue per customer and the churn rate also contribute to insights that contribute to certain of our business planning decisions.
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 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Visits1,394
 1,448
 4,148
 3,705
Page views5,872
 5,405
 17,313
 13,258
The following table sets forth certain key operating metrics for our Digital Media and Cybersecurity and Martech subscription and licensing businesses for the three months ended March 31, 2024 and 2023:
Sources: Google Analytics
Three months ended March 31,
2024
2023 (4)
Customers (in thousands) (1)
3,3433,175
Average quarterly revenue per customer (2)
$44.55$44.78
Churn rate (3)
3.09%3.30%
(1)    Represents the quarterly average of the end of month customer counts for both the Digital Media and Partner PlatformsCybersecurity and Martech businesses. Resellers without visibility into the number of underlying customers served by the reseller are counted as one customer.

(2)Represents quarterly gross subscription and licensing revenues divided by customers as defined in footnote (1).
(3)Churn rate is calculated as (i) the average revenue per customer in the prior month multiplied by the number of cancellations in the current month, calculated at each business and aggregated; divided by (ii) subscription and licensing 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 into a reseller relationship enabling us to identify the underlying customers and for our Digital Media segment to remove certain subscribers who have paused their subscription for more than one month and to include certain subscribers that are within the estimated active usage period of a lifetime subscription. The following table summarizes the adjustments made to previously reported amounts.
Three months ended March 31, 2023
Customers (in thousands)159 
Average quarterly revenue per customer$(2.36)
Churn rate0.02 %

Critical Accounting Policies and Estimates

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. Our critical accounting policies are described in our 20162023 Annual Report on Form 10-K filed with the SEC on March 1, 2017.February 26, 2024. During the three months ended September 30, 2017,March 31, 2024, there were no significant changes in our critical accounting policies and estimates. See Note 1 — Basis of Presentation and Overview in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional description of significant accounting policies of the Company.

Results of Operations for the Three and Nine Months Ended September 30, 2017March 31, 2024
Business Cloud Services SegmentDigital Media
Assuming a stable or improving economic environment,We expect our Digital Media business to improve as we integrate our recent acquisitions and subjectover the longer term as advertising transactions continue to shift from offline to online, and we continue to expand our risk factors, we expect the revenue and profits as included in the results of operations below in our Business Cloud Services segment to be stable for the foreseeable future (excluding the impact of acquisitions).advertising platforms. The main focus of our Business Cloud Servicesplatform monetization programs is to provide relevant and useful advertising to visitors to our websites, provide meaningful content that informs and shapes purchase intent, and leverage our brand and editorial assets into subscription platforms. As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and those included within our advertising networks, and improve the effectiveness of our content in driving purchase decisions and subscriptions.
The operating margin we realize on revenues generated from ads placed on our websites is significantly higher than the operating margin we realize from revenues generated from those placed on third-party websites. Growth in advertising revenues from our websites has generally exceeded that from third-party websites. This trend has generally had a positive impact on our operating margins.
We expect acquisitions to remain an important component of our strategy and use of capital in this business; however, for a number of reasons, including 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.
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Cybersecurity and Martech
The main focus of our Cybersecurity and Martech service offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity, and security of our customers as the technologies and devices they use evolve over time. As a result, we expect to continue to take steps to enhance our existing offerings and offer new services to continue to satisfy the evolving needs of our customers. Through our IP licensing operations, which are included in the Business Cloud Services segment, we seek to make our IP available for license to third parties, and we expect to continue to attempt to obtain additional IP through a combination of acquisitions and internal development in an effort to increase available licensing opportunities and related revenues.
We expect acquisitions to remain an important component of our strategy and use of capital in this segment;business; however, we cannot predict whether our current pacefor a number of acquisitions will remain the same within this segment. Inreasons, 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 within this segment but with different business models, may impact the segment’sCybersecurity and Martech’s overall profit margins. Also, as IP licensing often involves litigation, the timing of licensing transactions is unpredictable and can and does vary significantly from period to period. This variability can cause the overall segment’s financial results to materially vary from period to period.
Digital Media Segment
Assuming a stable or improving economic environment, and subject to our risk factors, we expect the revenue and profits in our Digital Media segment to improve over the next several quarters as we integrate our recent acquisitions and over the longer term as advertising transactions continue to shift from offline to online. However, we expect overall lower margins in our Digital Media segment as the recent acquisition of Everyday Health currently operates at a lower level than our historical results. We expect that margins will trend back towards historical levels once the acquisition of Everyday Health is integrated into our existing cost structure and amortization expense is substantially realized. The main focus of our advertising programs is to provide relevant and useful advertising to visitors to our websites and those included within our advertising networks, reflecting our commitment to constantly improve their overall web experience. As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and those included within our advertising networks.

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


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

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

Revenues

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

 (in thousands, except percentages)Three months ended March 31,Percentage Change
20242023
Revenues$314,485 $307,142 2.4%
Our revenues consist of revenues from our Business Cloud Services segment and from our Digital Media segment. Business Cloud Servicesbusiness and our Cybersecurity and Martech business. Digital Media revenues primarily consist of advertising and performance marketing revenues and subscription and licensing revenue earned through the granting of access to, or delivery of, certain data products or services to customers, fees paid for generating business leads, and licensing and sale of editorial content and trademarks. Cybersecurity and Martech revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services. We also generate Business Cloud Services revenues from IP licensing. Digital Media revenues primarily consist of advertising revenues, fees paid for generating business leads, and licensing and sale of editorial content and trademarks.

Our revenues in 2017 have increased overduring the comparable three and nine monthmonths ended March 31, 2024 compared to the prior period of 2016 primarily due to a combination of acquisitions$4.3 million increase in subscription and organic growth within both thelicensing revenue in our Digital Media business and Business Cloud Services segments.a $2.5 million increase in subscription and licensing revenue in our Cybersecurity and Martech business. Included in revenue during the three months ended March 31, 2024 was $7.8 million of incremental revenue contributed by businesses acquired in 2023 and 2024. The Company considers revenue from an acquired business to become organic revenue in the first month in which the Company can compare that full month in the current year against the corresponding full month under its ownership in the prior year.

Direct costs
Cost of Revenues
(in thousands, except percentages)Three months ended March 31,Percentage Change
20242023
Direct costs$47,067 $45,730 2.9%
As a percent of revenue15.0 %14.9 %

(in thousands, except percentages)
 Three Months Ended
September 30,		 Percentage Change Nine Months Ended
September 30,		 Percentage Change
 2017 2016   2017 2016  
Cost of revenue$42,371 $36,992 15% $126,339 $106,870 18%
As a percent of revenue15% 18% 
 16% 17% 

Cost of revenues isDirect costs primarily comprisedconsist of costs associated with data and voice transmission, numbers, network operations, customer service, editorial andcontent fees, production costs, online processingroyalty fees, and equipment depreciation.hosting costs. The increase in cost of revenuesdirect costs for the three and nine months ended September 30, 2017March 31, 2024 compared to the prior period was primarily due to ana $2.7 million increase in costs associated with businesses acquired inweb and subsequent to the third quarter 2016 that resulted in additional editorial and production, database hosting fees and customer servicea $1.1 million increase in merchant fees, partially offset by a $1.4 million decrease in depreciation and amortization costs and a $0.9 million decrease in advertising inventory costs.



Operating Expenses

Sales and Marketing.Marketing

(in thousands, except percentages)Three months ended March 31,Percentage Change
20242023
Sales and marketing$117,000 $115,920 0.9%
As a percent of revenue37.2 %37.7 %
(in thousands, except percentages)
 Three Months Ended
September 30,		 
Percentage
Change
 Nine Months Ended
September 30,		 Percentage Change
 2017 2016   2017 2016  
Sales and Marketing$79,432 $46,425 71% $237,772 $143,155 66%
As a percent of revenue29% 22% 
 30% 23% 
Our salesSales and marketing costs consist primarily of Internet-basedinternet-based advertising, sales and marketing, personnel costs, and other business development-related expenses. Our Internet-basedinternet-based advertising relationships consist primarily of fixed cost and performance-based (cost-per-impression, cost-per-click and cost-per-acquisition) advertising relationships with an array of online service providers. Advertising cost for the three months ended September 30, 2017 was $35.7 million (primarily consists of $24.1 million of third-party advertising costs and $10.4 million of personnel costs) compared to 2016 of $23.1 million (primarily consists of $15.5 million third-party advertising costs and $6.2 million personnel costs). Advertising cost for the nine months ended September 30, 2017 was $101.7 million (primarily consists of $67.8 million of third-party advertising costs and $30.5 million of personnel costs) compared to 2016 of $69.2 million (primarily consists of $46.6 million third-party advertising costs and $18.0 million personnel costs).TheThe increase in sales and marketing expenses forduring the three and nine months ended September 30, 2017 versusMarch 31, 2024, compared to the prior comparable periodsperiod was primarily due to increased personnel costs$2.1 million higher personnel-related expenses and advertising associated with the acquisition of Everyday Health within the Digital Media segment, which was acquired in December 2016.$1.4 million higher expenses for software purchases, partially offset by $2.7 million lower marketing expenses.


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Research, Development, and Engineering.

(in thousands, except percentages)Three months ended March 31,Percentage Change
20242023
Research, development, and engineering$17,774 $17,914 (0.8)%
As a percent of revenue5.7 %5.8 %
(in thousands, except percentages)
 Three Months Ended
September 30,		 
Percentage
Change
 Nine Months Ended
September 30,		 Percentage Change
 2017 2016   2017 2016  
Research, Development and Engineering$12,431 $8,965 39% $35,737 $27,165 32%
As a percent of revenue5% 4% 
 4% 4% 

Our research,Research, development, and engineering costs consist primarily of personnel-related expenses. The increasedecrease in research, development, and engineering costs for the three and nine months ended September 30, 2017 versusMarch 31, 2024, compared to the prior comparable periodsperiod was primarily due to additionallower personnel related costs associated with acquisitions withindue primarily to an increase in capitalized costs related to the Business Cloud Servicesnature of the projects in 2024 compared to 2023, partially offset by an increase in related consulting and Digital Media segments and additional expenses for professional services.

fees.
General, Administrative, and Administrative.Other Related Costs

(in thousands, except percentages)
Three Months Ended September 30, 
Percentage
Change
 Nine Months Ended September 30, Percentage Change
2017 2016 2017 2016 
General and Administrative$76,425 $55,612 37% $232,118 $170,823 36%
(in thousands, except percentages)
(in thousands, except percentages)
2024
2024
General, administrative, and other related costs
General, administrative, and other related costs
General, administrative, and other related costs
As a percent of revenue28% 26% 
 29% 27% 
As a percent of revenue
As a percent of revenue
Our general, 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 increasedecrease in general, administrative, and administrative expenseother related costs for the three and nine months ended September 30, 2017 versusMarch 31, 2024 compared to the prior comparable periodsperiod was primarily due to additionala $4.6 million decrease in depreciation and amortization of intangible assets, personnel costs relating to businesses acquired in and subsequent to the third quarter 2016, severance costs associated with acquisitions, and depreciation of fixed assets, and professional fees.


expense.
Share-Based Compensation Expense

The following table represents share-based compensation expense included in cost of revenues and operating expenses inpresents the accompanying condensed consolidated statements of income for the three and nine months ended September 30, 2017 and 2016 (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Cost of revenues$120
 $116
 $357
 $314
Operating expenses:       
Sales and marketing365
 423
 1,265
 1,388
Research, development and engineering296
 235
 815
 663
General and administrative3,782
 2,925
 11,303
 7,582
Total$4,563
 $3,699
 $13,740
 $9,947

During the second quarter of 2017, the Company accelerated the vesting of certain shares held by employees which were surrendered to the Company to satisfy tax withholding obligations in connection with such employees’ restricted stock. The Company recognized share-based compensation of $1.4 million during the second quarter 2017 due to this vesting acceleration.

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

Three months ended March 31,
20242023
Direct costs$61 $76 
Sales and marketing758 924 
Research, development, and engineering1,090 783 
General, administrative, and other related costs6,963 6,619 
Total share-based compensation expense$8,872 $8,402 
Non-Operating Income and Expenses

The following table represents the components of non-operating income and expenses for the three months ended March 31, 2024 and 2023 (in thousands): 
Three months ended March 31,Percentage Change
20242023
Interest expense, net$(1,769)$(4,480)(60.5)%
Loss on sale of businesses(3,780)— (100%)
Unrealized loss on short-term investments held at the reporting date, net(10,705)(20,345)(47.4)%
Gain on investments, net— 357 100.0 %
Other loss, net(104)(908)(88.5)%
Total non-operating expense$(16,358)$(25,376)(35.5)%
Interest expense, net. Our interestnet. Interest expense net is generated primarily from interest expense due toon outstanding debt, partially offset by interest income earned on cash, cash equivalents and short and long-term investments. Interest expense, net was $25.3 million and $10.4 million for the three months ended September 30, 2017 and 2016, respectively. Interest expense, net increased over the prior comparable period primarily due to increasedgenerated from interest expense associated with the issuance of the $650 million 6.0% Senior Notes, the loss of $8.0 million on the extinguishment of the $250 million 8.0% Senior Notes and decreased interest incomeearned on cash, cash equivalents, and investments. Interest expense, net was $51.4$1.8 million and $31.0$4.5 million for the ninethree months ended September 30, 2017March 31, 2024 and 2016,2023, respectively. Interest expense, net increased overdecreased
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during the three months ended March 31, 2024, compared to the prior comparable period primarily due to increasedhigher interest expense associated withincome as a result of higher interest rates.
Loss on sale of business. Loss on sale of business during the issuance of the $650 million 6.0% Senior Notes and our line of credit borrowings,three months ended March 31, 2024 represents the loss on disposal of an international asset at Digital Media within the extinguishmentshopping vertical.
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 $10.7 million and $20.3 million during the three months ended March 31, 2024 and 2023, respectively. The unrealized loss recorded during the periods presented represents the change in fair value of our investment in Consensus common stock.
Gain on investments, net. Gain on investments, net is generated from gains from investments in equity and debt securities. Gain on investments, net was zero and $0.4 million during the $250 million 8.0% Senior Notesthree months ended March 31, 2024 and decreased interest income2023, respectively. Gain on cash, cash equivalents and investments.investments, net recorded during the first quarter of 2023 was related to the disposition of Consensus common stock.

Other (income) expense, net. Our other (income) expense,loss, net. Other loss, net is generated primarily from miscellaneous items and gaingains or losses on currency exchange and sale of investments.foreign currency. Other (income) expense,loss, net was $(3.9)$0.1 million and $(9.7)$0.9 million forduring the three months ended September 30, 2017March 31, 2024 and 2016,2023, respectively. Other (income) expense, net decreased overThe decrease during the prior comparable period due to a decrease in gains earned in the current period related to the sales of Cambridge BioMarketing Group, LLC (“Cambridge”) and j2 Australia Hosting Pty Ltd (dba “Web24”)three months ended March 31, 2024 compared to the prior period gain on sale of our strategic investment in Carbonite and a breakup fee associated our bid for Gawker Media Group. Other (income) expense, net was $0.7 million and $(9.8) million for the nine months ended September 30, 2017 and 2016, respectively. Other (income) expense, net decreased over the prior comparable period dueprimarily attributable to a decreasechanges in gains earned in the current period related to the sales of Cambridge and Web24; partially offset by increasedor losses on currency exchange compared to the prior period gain on sale of our strategic investment in Carbonite and a breakup fee associated our bid for Gawker Media Group.

foreign currency.
Income Taxes

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



Provision for income taxes amounted to $9.2income tax expense of $8.2 million and $15.8income tax benefit of $0.6 million for the three months ended September 30, 2017March 31, 2024 and 2016, respectively, and $27.9 million and $44.0 million for the nine months ended September 30, 2017 and 2016,2023, respectively. Our effective tax rate was 22.1%42.2% and 25.8%(65.6)% for the three months ended September 30, 2017March 31, 2024 and 2016, respectively, and 23.7% and 28.7% for the nine months ended September 30, 2017 and 2016,2023, respectively.

The decreaseincrease in our effective income tax rate for the three months and nine months ended September 30, 2017March 31, 2024 compared to the prior period was primarily attributable to the following:

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

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

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

1.an increase in our effective income tax rate during 2024 due to the recognition of a valuation allowance against a portion of our U.S. capital loss carryforwards, which resulted in a discrete tax charge of $3.2 million;
Significant judgment2.an increase in our effective income tax rate due to a decrease in the amount of unrealized losses recognized on our investment in Consensus common stock, which resulted in a lower tax benefit during the three months ended March 31, 2024; and
3.an increase in our effective income tax rate during 2024 due to a $1.0 million tax benefit recognized in 2023 related to the release of reserves for uncertain tax positions with no similar event during the three months ended March 31, 2024.
Judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis. We believe our tax positions, including intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business. Certain of these tax positions have in the past been, and are currently being, challenged, and this may have a significant impact on our effective tax rate if our tax reserves are insufficient.

Equity Method Investment
SegmentLoss from equity method investment, net. 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.
Loss from equity method investment was $0.6 million and $9.2 million, net of tax benefit, for the three months ended March 31, 2024 and 2023, respectively. The decrease in loss from equity method investment, net during the three months ended March 31, 2024 compared to the prior period was primarily due to a smaller decline in the value of the underlying investments.
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Digital Media and Cybersecurity and Martech Results
Our business segmentsbusinesses are based on the organization structure used by management for making operating and investment decisions and for assessing performance. Ourperformance and have been aggregated into two reportable business segments are:segments: (i) Business Cloud Services;Digital Media and (ii) Digital Media.Cybersecurity and Martech.
We evaluate the performance of our operating segments based on segment revenues, including both external and intersegmentinter-business net sales, and segment operating income. We account for intersegmentinter-business sales and transfers based primarily on standard costs with reasonable mark-ups established between the segments.businesses. Identifiable assets by segmentbusiness are those assets used in the respective reportable segment’sbusiness’ operations. Corporate assets consist of cash and cash equivalents, deferred income taxes, and certain other assets. All significant intersegmentinter-business amounts are eliminated to arrive at our consolidated financial results.
RevenuesDigital Media
The following table presents our revenues by source as a percentage of total revenues for the three and nine months ended September 30, 2017 and 2016:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Business Cloud Services revenues:       
Fax and Voice35.4% 44.1% 35.7% 44.3%
Other17.9% 24.1% 18.2% 23.8%
Total Business Cloud Services revenues:53.3% 68.2% 53.9% 68.1%
Digital Media revenues:       
Media46.7% 31.8% 46.1% 31.9%
Total revenues100.0% 100.0% 100.0% 100.0%


Business Cloud Services
The following segmentfinancial results are presented for the three and nine months ended September 30, 2017 and 2016as follows (in thousands):
Three months ended March 31,
20242023
Revenue$239,033 $234,126 
Inter-business revenue19 85 
Total239,052 234,211 
Operating costs and expenses207,447 205,742 
Operating income$31,605 $28,469 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
External net sales$145,787
 $143,342
 $432,039
 $423,941
Inter-segment net sales—
 —
 —
 —
Segment net sales145,787
 143,342
 432,039
 423,941
Cost of revenues30,112
 31,377
 89,144
 90,389
Gross profit115,675
 111,965
 342,895
 333,552
Operating expenses59,550
 59,108
 172,371
 177,944
Segment operating income$56,125
 $52,857
 $170,524
 $155,608

SegmentDigital Media’s net sales of $145.8$239.0 million for the three months ended September 30, 2017March 31, 2024 increased $2.4$4.9 million, or 1.7%2.1%, and segment net sales of $432.0 million for the nine months ended September 30, 2017 increased $8.1 million, or 1.9%, fromcompared to the prior comparable periodsperiod primarily due to business acquisitions.$7.8 million of incremental revenue contributed by businesses acquired in 2023 and 2024, partially offset by an organic decline in other businesses.
Segment gross profitDigital Media’s operating costs and expenses of $115.7$207.4 million for the three months ended September 30, 2017March 31, 2024 increased $3.7$1.7 million, and segment gross profit of $342.9 million for the nine months ended September 30, 2017 increased $9.3 million fromor 0.8%, compared to the prior comparable periodsperiod primarily due to business acquisitions.
Segment operatinghigher direct costs and sales and marketing expenses, of $59.6 million for the three months ended September 30, 2017 increased $0.4 million and segment operating expenses of $172.4 million for the nine months ended September 30, 2017 decreased $(5.6) million from the prior comparable periods primarily due to (a)partially offset by lower amortization of intangible assets and transition service costs associated with businesses acquired in and subsequent to the prior comparable periods; and (b) reduced miscellaneous general, and administrative, related fees. As a result of these factors, segment operating income of $56.1 million for the three months ended September 30, 2017 increased $3.3 million, or 6.2%, and segment operating income of $170.5 million for the nine months ended September 30, 2017 increased $14.9 million, or 9.6%, from the prior comparable periods. Our Business Cloud Services segment 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.


We group these services into three main categories based on the similarities of these services: Cloud Connect, Other Cloud Services and Intellectual Property. Cloud Connect consists of our Fax and Voice services and Other Cloud Services consist of Backup, Email Security, Email Marketing and Web Hosting.
 Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
 Revenue Depreciation and Amortization Operating Income Revenue Depreciation and Amortization 
Operating Income(4)
            
Cloud Connect
 (Fax/Voice)
$96,882
 $7,001
 $44,663
 $286,163
 $18,964
 $133,958
Cloud Services47,693
 8,949
 11,947
 142,187
 28,330
 37,824
Intellectual Property1,212
 1,195
 (485) 3,689
 3,803
 (1,258)
   Total$145,787
 $17,145
 $56,125
 $432,039
 $51,097
 $170,524
 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
 Revenue Depreciation and Amortization Operating Income Revenue Depreciation and Amortization 
Operating Income(4)
            
Cloud Connect
(Fax/Voice)		$92,599
 $5,950
 $43,503
 $275,700
 $19,096
 $126,598
Cloud Services49,624
 12,826
 10,350
 144,853
 35,327
 31,974
Intellectual Property1,119
 1,442
 (996) 3,388
 4,548
 (2,964)
   Total$143,342
 $20,218
 $52,857
 $423,941
 $58,971
 $155,608
Digital Media
 The following segment results are presented for the three and nine months ended September 30, 2017 and 2016 (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
External net sales$127,830
 $66,774
 $369,419
 $198,477
Inter-segment net sales35
 45
 51
 136
Segment net sales127,865
 66,819
 369,470
 198,613
Cost of revenues12,265
 5,615
 37,201
 16,482
Gross profit115,600
 61,204
 332,269
 182,131
Operating expenses103,234
 47,272
 313,266
 148,916
Segment operating income$12,366
 $13,932
 $19,003
 $33,215
Segment net sales of $127.9 million for the three months ended September 30, 2017 increased $61.0 million, or 91.4%, and segment net sales of $369.4 million for the nine months ended September 30, 2017 increased $170.9 million, or 86.0%, from the prior comparable periods primarily due to the acquisition of Everyday Health in December 2016.
Segment gross profit of $115.6 million for the three months ended September 30, 2017 increased $54.4 million, or 88.9%, and segment gross profit of $332.3 million for the nine months ended September 30, 2017 increased $150.1 million, or 82.4%, from the prior comparable periods primarily due to the acquisition of Everyday Health in December 2016.
Segment operating expenses of $103.2 million for the three months ended September 30, 2017 increased $56.0 million and segment operating expenses of $313.3 million for the nine months ended September 30, 2017 increased $164.4 million from the prior comparable periods primarily due to the acquisition of Everyday Health in December 2016 comprised primarily of salary and related costs, marketing costs, and amortization of intangible assets.


costs.
As a result of these factors, segmentDigital Media’s operating income of $12.4$31.6 million for the three months ended September 30, 2017 decreased $(1.6)March 31, 2024 increased $3.1 million, or (11.2)%11.0%, compared to the prior period.
Cybersecurity and segmentMartech
The financial results are presented as follows (in thousands):
Three months ended March 31,
20242023
Revenue$75,452 $73,016 
Inter-business revenue— — 
Total75,452 78,192 
Operating costs and expenses56,043 61,413 
Operating income$19,409 $16,779 
Cybersecurity and Martech’s net sales of $75.5 million for the three months ended March 31, 2024 increased $2.4 million, or 3.3%, compared to the prior period primarily due to the realization of functional intellectual property revenue in certain businesses during the period.
Cybersecurity and Martech’s operating costs and expenses of $56.0 million for the three months ended March 31, 2024 decreased $5.4 million, or 8.7% compared to the prior period primarily due to lower general, administrative, and related costs and direct costs.
As a result of these factors, Cybersecurity and Martech’s operating income of $19.0$19.4 million for the ninethree months ended September 30, 2017 decreased $(14.2)March 31, 2024 increased $2.6 million, or (42.8)% from the prior comparable periods.15.7%.

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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 September 30, 2017, we hadCash, cash and investments of $402.5 million compared to $124.0 million at December 31, 2016. The increase in cash and investments resulted primarily from the issuance of long-term debt and cash from operations, partially offset by the repayment of the line of credit, business acquisitions, dividends and interest paid, and purchases of property and equipment. At September 30, 2017, cashequivalents, and investments consisted of cash and(in thousands):
March 31, 2024December 31, 2023
Cash and cash equivalents$734,779 $737,612 
Short-term investments16,404 27,109 
Long-term investments139,964 140,906 
Cash, cash equivalents and investments$891,147 $905,627 
Cash, cash equivalents, of $402.5 million. We retain a substantial portion of our cash and investments in foreign jurisdictions for future reinvestment. As of September 30, 2017, cash and investments held within domestic and foreign jurisdictions were $143.6 millionas follows (in thousands):
March 31, 2024December 31, 2023
Cash, cash equivalents and investments held in domestic jurisdiction$712,072 $742,010 
Cash, cash equivalents and investments held in foreign jurisdiction179,075 163,617 
Cash, cash equivalents and investments$891,147 $905,627 
For information on short-term and $258.9 million, respectively. If we were to repatriate funds held within foreign jurisdictions, we would incur U.S. income tax on the repatriated amount at the federal statutory ratelong-term investments of 35% and the state statutory rate where applicable, net of a credit for foreign taxes paid on such amounts.
On February 9, 2017, the Company, declared a quarterly cash dividendrefer to Note 4 — Investments in Part I Item 1 of $0.3650 per sharethis Quarterly Report on Form 10-Q for further details.
Financings
As of common stock payableMarch 31, 2024 and 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.
As of March 9, 2017 to all stockholders of record as of the close of business on February 22, 2017. On May 4, 2017, the Company’s Board of Directors approved a quarterly cash dividend of $0.3750 per share of j2 Global common stock payable on June 2, 2017 to all stockholders of record as of the close of business on May 19, 2017. On August 2, 2017, the Company declared a quarterly cash dividend of $0.3850 per share of j2 Global common stock payable on September 1, 2017 to all stockholders of record as of the close of business on August 14, 2017. Future dividends are subject to Board approval.

On June 27, 2017, j2 Cloud Services, LLC (“j2 Cloud”), a wholly-owned subsidiary of j2 Global, Inc.,31, 2024, we and j2 Cloud Co-Obligor, Inc., a wholly-owned subsidiary of j2 Cloud (the “Co-Issuer” and together with j2 Cloud, the “Issuers”) completed the issuance and sale of $650 millionour subsidiaries had outstanding $1.0 billion in aggregate principal amount of its 6.0% senior notes due 2025 in a private placement. The proceeds were used to redeem allindebtedness. As of its j2 Cloud’s 8.0% notes due in 2020, and to distribute sufficient net proceeds to j2 Global to pay off all amounts outstanding under its existing credit facility (as described further below), with the remaining net proceeds to be used for general corporate purposes, including acquisitions.

On December 5, 2016, j2 Global, Inc. entered into a Credit Agreement (the “Credit Agreement”) with MUFG Union Bank, N.A., as administrative agent, and certain other lenders from time to time party thereto (collectively, the “Lenders”). Pursuant to the Credit Agreement, the Lenders provided j2 with a credit facility of $225.0 million (the “Credit Facility”), $180.0March 31, 2024, our total future minimum lease payments are $27.9 million of which was drawn at closing of the Everyday Health acquisition and used to finance a portion of the cash considerationapproximately $12.8 million future minimum lease payments are due in the acquisition. Duringsucceeding twelve months.
As of March 31, 2024, our liability for uncertain tax positions was $36.6 million. In the prior quarter,ordinary course of business, the Company drew an additional $45.0 million. On June 27, 2017, theenters into commitments including those related to cloud computing, information technology, security, and information and document management. The Company repaid the outstanding credit facilityalso has revenue sharing arrangements with cash received from its subsidiary, j2 Cloud,annual minimum guarantees based upon third-party website advertising metrics and terminated the Credit Agreement.

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

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

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

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Cash Flows

Our primary sourcesThe following table provides a summary of liquidity are cash flows generated from operations, together with cashoperating, investing, and cash equivalents and short-term investments. Netfinancing activities (in thousands):
Three months ended March 31,Change
20242023
Net cash provided by operating activities$75,558 $115,307 $(39,749)
Net cash used in investing activities$(71,481)$(38,791)$(32,690)
Net cash used in financing activities$(6,311)$(9,483)$3,172 
Operating Activities
Our net cash provided by operating activities was $179.0 million and $192.5 million for the nine months ended September 30, 2017 and 2016, respectively. 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 $39.7 million decrease in our net cash provided by operating activities in 2017during the three months ended March 31, 2024 compared to 2016the prior period was primarily attributablerelated to a decrease in accounts payable and accrued expenses including a $20.0 million payment of certain contingent compensation obligations of Everyday Health as well as a payment of contingent consideration of $20.0 million associated withincreased payments to our vendors during the acquisition of Ookla;current period, partially offset by aan increase in collections from our customers. The decrease in accounts receivable and increased depreciation and amortization. Ournet cash andprovided by operating activities includes the activities of TDS Gift Cards (“TDS”) from the date of the acquisition. TDS negatively impacted the Company’s net cash equivalents and short-term investments were $402.5provided by operating activities by $39.1 million.
Investing Activities
The $32.7 million and $124.0 million at September 30, 2017 and December 31, 2016, respectively.

Net cash usedincrease in investing activities was $(44.6) million and $(41.7) million for the nine months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017, net cash used in investing activities during the three months ended March 31, 2024 compared to the prior period was primarily attributablerelated to higher cash used on business acquisitions capital expenditures associated withduring the purchase of property and equipment andthree months ended March 31, 2024 compared to the purchase of intangible assets;2023 period, partially offset by proceeds fromreceived on the sale of businesses. Foran international asset at Digital Media within the nine months ended September 30, 2016, net cash used in investing activities was primarily attributable to business acquisitions, the purchase of available-for-sale investments,shopping vertical and lower expenditures on property and equipment and intangible assets; partially offset by the maturity of available-for-sale investments. equipment.
Financing Activities
The increase$3.2 million decrease in our net cash used in investing activities in 2017 compared to 2016 was primarily lower maturity of investments; partially offset by reduced purchases of investments and additional purchases of property and equipment; partially offset by lower business acquisitions and proceeds from the sale of businesses.

Net cash provided by (used in) financing activities was $135.6 million and $(118.6) million for the nine months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017, net cash provided by financing activities was primarily attributable to proceeds from the issuance of long-term debt, additional borrowings under our line of credit and exercise of stock options; partially offset by the repayment in full of the line of credit and other debt, dividends paid, repurchases of stock and business acquisitions. For the nine months ended September 30, 2016, net cash used in financing activities during the three months ended March 31, 2024 compared to the prior period was primarily attributablerelated to repurchases of stock which includes the acquisition of Integrated Global Concepts, Inc., which held shares of j2 Global common stock, dividends paid, and business acquisitions; partially offset by the exercise of stock options and excess tax benefit from share-based compensation. The changelower payments made in net cash provided by financing activities in 2017 compared to 2016 was primarily attributable to the proceeds from the issuance of long-term debt; partially offset by the net payment associatedconnection with the payment in full of our line of credit and other debt.

previously acquired businesses.
Stock Repurchase Program

In February 2012, the Company’sOn August 6, 2020, our Board of Directors approved a program authorizing the repurchase of up to fiveten million shares of our common stock through February 20, 2013August 6, 2025 (the “2012“2020 Program”) which was subsequently extended through February 19, 2018. . In connection with the authorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the repurchase program.
During the nine month periodthree months ended September 30, 2017, we repurchased zero shares under this program. Cumulatively at September 30, 2017, 2.1 millionMarch 31, 2024, no shares were repurchased at an aggregate costunder the 2020 Program. As a result of $58.6 million (including an immaterial amountthe repurchases, to date, the number of commission fees).



Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitmentsshares of the Company’s common stock available for purchase under the 2020 Program as of September 30, 2017:March 31, 2024 was 4,741,308 shares. Refer to Note 10 — Stockholders’ Equity in Item 1 of Part I of this Quarterly Report on Form 10-Q for further details.
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Payments Due in
(in thousands)
Contractual Obligations 2017 2018 2019 2020 2021 Thereafter Total
Long-term debt - principal (a) $—
 $—
 $—
 $—
 $402,500
 $650,000
 $1,052,500
Long-term debt - interest (b) 6,541
 54,031
 52,081
 52,081
 45,541
 156,000
 366,275
Operating leases (c) 3,551
 14,077
 12,775
 9,550
 8,580
 17,387
 65,920
Capital leases (d) 4
 9
 —
 —
 —
 —
 13
Telecom services and co-location facilities (e) 2,712
 2,950
 886
 185
 14
 10
 6,757
Holdback payment (f) 2,782
 2,050
 —
 —
 —
 —
 4,832
Other (g) 187
 —
 —
 —
 —
 —
 187
Total  $15,777
 $73,117
 $65,742
 $61,816
 $456,635
 $823,397
 $1,496,484

(a)These amounts represent principal on long-term debt.
(b)These amounts represent interest on long-term debt.
(c)These amounts represent undiscounted future minimum rental commitments under noncancellable operating leases.
(d)These amounts represent undiscounted future minimum rental commitments under noncancellable capital leases.
(e)These amounts represent service commitments to various telecommunication providers.
(f)These amounts represent the holdback amounts in connection with certain business acquisitions.
(g)These amounts represent certain consulting and Board of Directors fee arrangements.

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

Off-Balance Sheet Arrangements

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



Item 3.Quantitative and Qualitative Disclosures About Market Risk

The following discussion of the market risks we face contains forward-looking statements. Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those discussed in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. j2 GlobalZiff Davis undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors described in this document and in the other documents incorporated by reference herein, including our Annual Report on Form 10-K for the year ended December 31, 20162023 as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2017.

2024.
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.policy or otherwise approved by the Board of Directors. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of September 30, 2017,March 31, 2024, the carrying value of our cash and cash equivalents approximated fair value. Our return on these investments is subject to interest rate fluctuations.

As of September 30, 2017, we had no investments in debt securities with effective maturities greater than one year. As of September 30, 2017March 31, 2024 and December 31, 2016,2023, we had $734.8 million and $737.6 million, respectively, of cash and cash equivalent investments primarily in time deposits andfunds that invest in U.S. treasuries, money market funds as well as demand deposit accounts with maturities within three months or less. Currently, we do not have interest rate risk on our outstanding long-term debt as these arrangements have fixed interest rates. As of 90 days or lessMarch 31, 2024, the carrying value and the fair value of $402.5our 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 $124.0$460.0 million respectively. 

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 the three months ended March 31, 2024, 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 5 — Fair Value Measurements and Note 7 — Debt to the Notes in Item 1 of Part I of this Quarterly Report on Form 10-Q 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 $16.4 million as of March 31, 2024, is based upon the quoted market price of Consensus common stock. Our results of operations and financial condition have been and may be materially impacted by increases or decreases in the price of Consensus common stock, which is traded on the Nasdaq Global Select Market.
(Losses) gains on the investment in Consensus common stock were as follows (in thousands):
Three months ended March 31,
20242023
Realized gain on securities sold during the period$— $357 
Unrealized loss recognized during the period on equity securities held at the reporting date$(10,705)$(20,345)
The carrying value of investment in Consensus common stock as of March 31, 2024 was $16.4 million, or approximately 0.4% of the Company’s consolidated total assets. A $2.00 increase or decrease in the share price of Consensus common stock would result in an unrealized gain or loss, respectively, of approximately $2.1 million.
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Foreign Currency Risk

We conduct business in certain foreign markets, primarily in Canada, the United Kingdom, Australia, and the European Union.Union, Japan, 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 inter-companyintercompany debts in a timely manner, we will remain exposed to foreign currency fluctuations.
As we expand our international presence, we become further exposed to foreign currency risk by entering new markets with additional foreign currencies. The economic impact of currency exchange rate movements is often linked to variability in real growth, inflation, interest rates, governmental actions, and other factors. These changes, if material, could cause us to adjust our financing and operating strategies.

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

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

Foreign exchange losses forDuring the three months ended September 30, 2017March 31, 2024 and 2016 were $1.02023, foreign exchange losses amounted to zero and $0.8 million, and $0.3 million, respectively, and for the nine months ended September 30, 2017 and 2016 were $5.5 million and $1.2 million, respectively. The increase in losses to our earnings in the current period were attributable to increased inter-company debt between periods in foreign subsidiaries that were in functional currencies other than the U.S. Dollar.

Cumulative translation adjustments, net of tax, included in other comprehensive (loss) income for the three months ended September 30, 2017March 31, 2024 and 20162023 were $7.7$6.5 million and $(0.3)$(3.7) million, respectively, and for the nine months ended September 30, 2017 and 2016 were $23.6 million and $(9.6) million, respectively.



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


Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures
 
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of March 31, 2024, under the end of the period covered by this report, j2 Global’s management,supervision and with the participation of Nehemia Zucker, our principal executive officer,Chief Executive Officer (“CEO”) and R. Scott Turicchi, our principal financial officer,Chief Financial Officer (“CFO”), management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, Mr. Zuckerour CEO and Mr. TuricchiCFO concluded that theseour disclosure controls and procedures were effective as of the end of the period covered inby this Quarterly Report on Form 10-Q.

(b)Changes in Internal Controls

Management’s Report on Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), which occurred during the third quarter ended September 30, 2017March 31, 2024 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.   OTHER INFORMATION


Item 1.Legal Proceedings

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

In addition toThere has not been a material change in our risk factors since the other information set forth in this report, before deciding to invest in j2 Global or to maintain or increase your investment, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” infiling of our Annual Report on Form 10-K for the year ended December 31, 2016 (the “10-K Risk Factors”) as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2017. If any of these risks occur, our business, prospects, financial condition, operating results and cash flows could be materially adversely affected. The 10-K Risk Factors are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. There have been no material changes from the 10-K Risk Factors, except for the risks described in subsequently filed Quarterly Reports on Form 10-Q.2023.


Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
(a)Unregistered Sales of Equity Securities
None.
(b)Issuer Purchases of Equity Securities
None.
Effective February 15, 2012,Issuer Purchases of Equity Securities
On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to fiveten million shares of our common stock through February 20, 2013August 6, 2025 (the “2012“2020 Program”) which was subsequently extended through February 19, 2018.

. In July 2016, the Company acquired and subsequently retired 935,231 shares of j2 Global common stock in connection with the acquisitionauthorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the repurchase program. During the three months ended March 31, 2024, no shares were repurchased under the 2020 Program. See Note 10 — Stockholders’ Equity in Item 1 of Integrated Global Concepts, Inc. Part I of this Quarterly Report on Form 10-Q.
Cumulatively, as of March 31, 2024, the Company repurchased 5,258,692 shares, under the 2020 Program, at an aggregate cost of $401.8 million (including excise tax), which were subsequently retired. See Note 10 — Stockholders’ Equity in Item 1 of Part I of this Quarterly Report on Form 10-Q.
As a result of the purchaseCompany’s share repurchases, as of j2 Global common stock, the Company’s Board of Directors approved a reduction inMarch 31, 2024, the number of shares available for purchase underof the 2012 Program by the same amount leaving 1,938,689 shares of j2 GlobalCompany’s common stock available for purchase under this program. During the nine month period ended September 30, 2017, we repurchased zero shares under this program. Cumulatively at September 30, 2017, 2.1 million shares were repurchased at an aggregate cost of $58.6 million (including an immaterial amount of commission fees).
2020 Program was 4,741,308 shares.
The following table details the repurchases that were made under and outside the 20122020 Program, on a trade date basis, during the three months ended September 30, 2017:March 31, 2024:
Period
Total Number of Shares
Purchased (1)
Average Price
Paid Per Share (2)
Total Number of
Shares Purchased as Part of Publicly
Announced Plans or Program
Maximum Number of Shares That May Yet Be
Purchased Under the Plans or Program (3)
January 1, 2024 - January 31, 202414,995 $67.46 — 4,741,308 
February 1, 2024 - February 29, 2024248 $65.22 — 4,741,308 
March 1, 2024 - March 31, 202442,994 $67.34 — 4,741,308 
Total58,237 — 4,741,308 
Period
Total Number of
Shares
Purchased (1)
 
Average Price
Paid Per Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Program
 
Maximum
Number of
Shares That
May Yet Be
Purchased
Under the
Plans or
Program
July 1, 2017 - July 31, 20171,620
 $84.67
 —
 1,938,689
August 1, 2017 - August 31, 201712,558
 $78.51
 —
 1,938,689
September 1, 2017 - September 30, 2017—
 $—
 —
 1,938,689
Total14,178
   —
 1,938,689
(1)
All shares purchased were surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with employee stock options and/or the vesting of restricted stock issued to employees.


(1)Includes shares surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with employee stock options and/or the vesting of restricted stock issued to employees.

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

Item 3.Defaults Upon Senior Securities

None.


Item 4.Mine Safety Disclosures

Not Applicable.


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Item 5.Other Information
None.

Insider Trading Arrangements and Policies
During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. Certain of our officers have made elections to participate in, and are participating in, our employee stock purchase plan and 401(k) plan and have made, and may from time to time make, elections to have shares withheld to cover withholding taxes or pay the exercise price of options, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1trading arrangements (as defined in Item 408(c) of Regulation S-K).

Item 6.Exhibits
Exhibit No.Description
3.1
Amended and Restated Certificate of Incorporation of J2 Global, Inc., dated as of June 10, 2014 (incorporated by reference to Exhibit 3.1 to Ziff Davis’ Current Report on Form 8-K filed on June 10, 2014. (File No. 0-25965))
3.2
3.3
3.4
31.1
10.1*
Rule 13a-14(a)
Form of Restricted Stock Unit Agreement pursuant to the Ziff Davis, Inc. 2015 Stock Option Plan (1)
10.2*
Form of Performance Stock Unit Agreement pursuant to the Ziff Davis, Inc. 2015 Stock Option Plan (1)
10.3*
SeventhAmendment to the Credit Agreement, dated as of April 10, 2024, among Ziff Davis, Inc., the Guarantors, the lenders party to the Amendment constituting Required Lenders and U. S. Bank National Association, as administrative agent for the Lenders.
31.1*
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
31.2*
31.2Rule 13a-14(a)
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
32.1**
32.1Section 1350
Certification of Principal Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002, 18 U.S.C. Section 1350
32.2**
32.2Section 1350
Certification of Principal Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002, 18 U.S.C. Section 1350
101.INS*Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101101.SCH*The following financial information from j2 Global, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formattedInline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (v) the Notes to Condensed Consolidated Financial Statements.Exhibit 101)



*    Filed herewith.
SIGNATURE**    Furnished herewith,

(1)    Indicates a management contract or compensatory plan.




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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ZIFF DAVIS, INC.
(registrant)j2 Global, Inc.
Date:May 9, 2024By:/s/ VIVEK SHAH
Date:Vivek ShahNovember 9, 2017By:/s/ NEHEMIA ZUCKER
Nehemia Zucker
Chief Executive Officer and a Director
(Principal Executive Officer)
Date:May 9, 2024By:/s/ BRET RICHTER
Bret Richter
Date:November 9, 2017By:/s/ R. SCOTT TURICCHI
R. Scott Turicchi
President and Chief Financial Officer
(Principal Financial Officer)
Date:May 9, 2024By:/s/ LAYTH TAKI
Layth Taki
Chief Accounting Officer
(Principal Accounting Officer)
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Date:November 9, 2017By:/s/ STEVE P. DUNN
Steve P. Dunn
Chief Accounting Officer 



INDEX TO EXHIBITS


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


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