Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 04, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 0-25965 | |
Entity Registrant Name | ZIFF DAVIS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-1053457 | |
Entity Address, Address Line One | 114 5th Avenue | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10011 | |
City Area Code | 212 | |
Local Phone Number | 503-3500 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | ZD | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 47,191,564 | |
Entity Central Index Key | 0001084048 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash and cash equivalents | $ 621,917 | $ 694,842 |
Short-term investments | 54,897 | 229,200 |
Accounts receivable, net of allowances of $6,425 and $9,811, respectively (includes $1,216 and $9,272 due from related party, respectively) | 232,297 | 316,342 |
Prepaid expenses and other current assets | 66,193 | 60,290 |
Total current assets | 975,304 | 1,300,674 |
Long-term investments | 124,228 | 122,593 |
Property and equipment, net | 171,181 | 161,209 |
Operating lease right-of-use assets | 44,257 | 55,617 |
Goodwill | 1,579,957 | 1,531,455 |
Other purchased intangibles, net | 129,282 | 149,513 |
Deferred income taxes, noncurrent | 7,636 | 5,917 |
Other assets | 32,053 | 20,090 |
TOTAL ASSETS | 3,433,068 | 3,770,280 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Accounts payable and accrued expenses | 212,926 | 229,772 |
Deferred revenue, current | 180,136 | 185,571 |
Operating lease liabilities, current | 23,171 | 27,156 |
Current portion of long-term debt | 0 | 54,609 |
Other current liabilities | 222 | 130 |
Total current liabilities | 416,455 | 497,238 |
Long-term debt | 998,499 | 1,036,018 |
Deferred revenue, noncurrent | 8,742 | 14,839 |
Operating lease liabilities, noncurrent | 38,334 | 53,708 |
Income taxes payable, noncurrent | 11,675 | 11,675 |
Liability for uncertain tax positions | 45,439 | 42,546 |
Deferred income taxes | 83,038 | 108,982 |
Other long-term liabilities | 37,241 | 37,542 |
TOTAL LIABILITIES | 1,639,423 | 1,802,548 |
Commitments and contingencies (Note 9) | ||
Preferred stock, $0.01 par value | 0 | 0 |
Common stock, $0.01 par value. Authorized 95,000,000; total issued and outstanding 47,189,907 and 47,440,137 shares at September 30, 2022 and December 31, 2021, respectively. | 472 | 474 |
Additional paid-in capital | 432,272 | 509,122 |
Retained earnings | 1,469,519 | 1,515,358 |
Accumulated other comprehensive loss | (108,618) | (57,222) |
TOTAL STOCKHOLDERS’ EQUITY | 1,793,645 | 1,967,732 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 3,433,068 | 3,770,280 |
Trade names | ||
ASSETS | ||
Intangible assets, net (excluding goodwill) | 142,044 | 147,761 |
Customer relationship | ||
ASSETS | ||
Intangible assets, net (excluding goodwill) | 227,126 | 275,451 |
Series A Preferred Stock | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Preferred stock, $0.01 par value | 0 | 0 |
Series B Preferred Stock | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Preferred stock, $0.01 par value | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Allowance for doubtful accounts | $ 6,425 | $ 9,811 |
Due to related party | $ 1,216 | $ 9,272 |
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 95,000,000 | 95,000,000 |
Common stock, shares issued (in shares) | 47,189,907 | 47,440,137 |
Common stock, shares outstanding (in shares) | 47,189,907 | 47,440,137 |
Series A Preferred Stock | ||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 6,000 | 6,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Series B Preferred Stock | ||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 20,000 | 20,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Total revenues | $ 341,873 | $ 355,144 | $ 994,297 | $ 1,008,094 | |
Cost of revenues | [1] | 52,603 | 49,698 | 144,707 | 142,335 |
Gross profit | 289,270 | 305,446 | 849,590 | 865,759 | |
Operating expenses: | |||||
Sales and marketing | [1] | 119,474 | 126,577 | 361,013 | 354,949 |
Research, development and engineering | [1] | 17,735 | 19,619 | 55,883 | 56,999 |
General and administrative | [1] | 95,658 | 114,240 | 299,842 | 339,236 |
Goodwill impairment on business | 27,369 | 0 | 27,369 | 32,629 | |
Total operating expenses | 260,236 | 260,436 | 744,107 | 783,813 | |
Income from operations | 29,034 | 45,010 | 105,483 | 81,946 | |
Interest expense, net | (8,560) | (14,490) | (28,419) | (56,980) | |
Gain on debt extinguishment, net | 10,112 | 0 | 11,505 | 0 | |
Loss on sale of businesses, net | 0 | (24,600) | 0 | (21,798) | |
Unrealized gain (loss) on short-term investments held at the reporting date, net | 4,201 | 0 | (14,165) | 0 | |
Gain (loss) on investments, net | 471 | 0 | (47,772) | (16,677) | |
Other income (loss), net | 4,218 | 107 | 12,962 | (466) | |
Income (loss) from continuing operations before income taxes and (loss) income from equity method investment, net | 39,476 | 6,027 | 39,594 | (13,975) | |
Income tax (expense) benefit | (18,100) | 2,665 | (33,231) | 19,883 | |
(Loss) income from equity method investment, net | (3,191) | (1,923) | (10,077) | 16,596 | |
Net income (loss) from continuing operations | 18,185 | 6,769 | (3,714) | 22,504 | |
Income from discontinued operations, net of income taxes | 0 | 35,800 | 0 | 113,705 | |
Net income (loss) | $ 18,185 | $ 42,569 | $ (3,714) | $ 136,209 | |
Net income (loss) per common share from continuing operations: | |||||
Basic (in dollars per share) | $ 0.39 | $ 0.14 | $ (0.08) | $ 0.50 | |
Diluted (in dollars per share) | 0.39 | 0.14 | (0.08) | 0.47 | |
Net income per common share from discontinued operations: | |||||
Basic (in dollars per share) | 0 | 0.77 | 0 | 2.51 | |
Diluted (in dollars per share) | 0 | 0.74 | 0 | 2.39 | |
Numerator for basic and diluted net income per common share: | |||||
Basic (in dollars per share) | 0.39 | 0.91 | (0.08) | 3.01 | |
Diluted (in dollars per share) | $ 0.39 | $ 0.88 | $ (0.08) | $ 2.86 | |
Weighted average shares outstanding: | |||||
Basic (in shares) | 46,871,897 | 46,738,073 | 46,967,671 | 45,258,819 | |
Diluted (in shares) | 46,871,897 | 48,582,585 | 46,967,671 | 47,565,062 | |
Share-based compensation expense | $ 6,386 | $ 6,403 | $ 20,806 | $ 18,002 | |
Cost of revenues | |||||
Weighted average shares outstanding: | |||||
Share-based compensation expense | 63 | 70 | 289 | 220 | |
Sales and marketing | |||||
Weighted average shares outstanding: | |||||
Share-based compensation expense | 772 | 335 | 2,447 | 879 | |
Research, development and engineering | |||||
Weighted average shares outstanding: | |||||
Share-based compensation expense | 567 | 514 | 2,048 | 1,390 | |
General and administrative | |||||
Weighted average shares outstanding: | |||||
Share-based compensation expense | $ 4,984 | $ 5,484 | $ 16,022 | $ 15,513 | |
[1] (1) Includes share-based compensation expense as follows: Cost of revenues $ 142 $ 67 $ 226 $ 150 Sales and marketing 1,106 278 1,675 544 Research, development and engineering 852 458 1,481 876 General and administrative 5,603 5,066 11,038 10,029 Total $ 7,703 $ 5,869 $ 14,420 $ 11,599 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 18,185 | $ 42,569 | $ (3,714) | $ 136,209 |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation adjustment | (24,753) | (11,101) | (55,283) | (16,269) |
Consensus separation adjustment | 0 | 0 | 4,056 | 0 |
Change in fair value on available-for-sale investments, net of tax expense of $— and $— for the three and nine months ended September 30, 2022, respectively, and $37 for the three and nine months ended September 30, 2021, respectively. | (169) | (114) | (169) | (114) |
Other comprehensive loss, net of tax | (24,922) | (11,215) | (51,396) | (16,383) |
Comprehensive (loss) income | $ (6,737) | $ 31,354 | $ (55,110) | $ 119,826 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Tax expense (benefit) for unrealized holding gain (loss) on available-for-sale investments | $ 0 | $ 37,000 | $ 0 | $ 37,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Cash flows from operating activities: | |||||
Net income (loss) | $ 18,185 | $ 42,569 | $ (3,714) | $ 136,209 | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||
Depreciation and amortization | 174,880 | 196,443 | |||
Amortization of financing costs and discounts | 2,051 | 21,295 | |||
Non-cash operating lease costs | 9,043 | 8,366 | |||
Share-based compensation | 20,806 | 19,119 | |||
Provision for credit losses on accounts receivable | (1,142) | 7,934 | |||
Deferred income taxes, net | (13,552) | 2,537 | |||
Gain on extinguishment of debt, net | (10,112) | 0 | (11,505) | 0 | |
Gain on sale of businesses | 0 | 24,600 | 0 | 21,798 | |
Goodwill impairment on business | 27,369 | 0 | 27,369 | 32,629 | |
Changes in fair value of contingent consideration | (2,305) | (567) | |||
Loss (income) from equity method investments | 10,077 | (16,596) | |||
Unrealized gain (loss) on short-term investments held at the reporting date | 14,165 | 0 | |||
Gain (loss) on investments, net | 47,772 | 16,677 | |||
Other | 269 | 9,591 | |||
Decrease (increase) in: | |||||
Accounts receivable (includes $9,425 and $0 with related parties) | 85,121 | 49,888 | |||
Prepaid expenses and other current assets | 3,177 | (10,610) | |||
Operating lease right-of-use assets | 3,851 | 2,833 | |||
Other assets | (12,518) | (2,378) | |||
Increase (decrease) in: | |||||
Accounts payable and accrued expenses | (24,974) | (1,409) | |||
Income taxes payable | 13,529 | (37,863) | |||
Deferred revenue | (25,400) | 4,774 | |||
Operating lease liabilities | (23,027) | (22,179) | |||
Liability for uncertain tax positions | 2,893 | (2,903) | |||
Other long-term liabilities | (3,647) | (5,336) | |||
Net cash provided by operating activities | 293,219 | 430,252 | |||
Cash flows from investing activities: | |||||
Proceeds from sale of available-for-sale investments | 0 | 663 | |||
Investment in available-for-sale securities | (15,000) | 0 | |||
Distribution from equity method investment | 0 | 15,327 | |||
Purchases of equity method investment | 0 | (22,249) | |||
Purchases of equity investments | 0 | (999) | |||
Purchases of property and equipment | (80,767) | (87,495) | |||
Acquisition of businesses, net of cash received | (104,094) | (112,444) | |||
Proceeds from sale of businesses, net of cash divested | 0 | 48,876 | |||
Purchases of intangible assets | 0 | (1,255) | |||
Net cash used in investing activities | (199,861) | (159,576) | |||
Cash flows from financing activities: | |||||
Payment of debt | (166,904) | (402,414) | |||
Proceeds from term loan | 112,286 | 0 | |||
Debt extinguishment costs | (756) | 0 | |||
Proceeds from bridge loan | 0 | 485,000 | |||
Repurchase of common stock | (76,545) | (29,855) | |||
Issuance of common stock under employee stock purchase plan | 5,235 | 4,232 | |||
Exercise of stock options | 148 | 2,880 | |||
Deferred payments for acquisitions | (14,734) | (13,387) | |||
Other | (559) | (6,619) | |||
Net cash (used in) provided by financing activities | (141,829) | 39,837 | |||
Effect of exchange rate changes on cash and cash equivalents | (24,454) | (6,698) | |||
Net change in cash and cash equivalents | (72,925) | 303,815 | |||
Cash and cash equivalents at beginning of period | 694,842 | 242,652 | $ 242,652 | ||
Cash and cash equivalents at beginning of period associated with discontinued operations | 0 | 66,210 | 66,210 | ||
Cash and cash equivalents at beginning of period associated with continuing operations | 694,842 | 176,442 | 176,442 | ||
Cash and cash equivalents at end of period | 621,917 | 546,467 | 621,917 | 546,467 | 694,842 |
Cash and cash equivalents at end of period associated with discontinued operations | 0 | 31,210 | 0 | 31,210 | 0 |
Cash and cash equivalents at end of period associated with continuing operations | $ 621,917 | $ 515,257 | $ 621,917 | $ 515,257 | $ 694,842 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Sep. 30, 2021 |
Statement of Cash Flows [Abstract] | ||
Due from related parties | $ 9,425 | $ 0 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common stock | Additional paid-in capital | Additional paid-in capital Cumulative Effect, Period of Adoption, Adjustment | Retained earnings | Retained earnings Cumulative Effect, Period of Adoption, Adjustment | Accumulated other comprehensive loss |
Beginning balance (in shares) at Dec. 31, 2020 | 44,346,630 | |||||||
Beginning balance at Dec. 31, 2020 | $ 1,211,018 | $ 443 | $ 456,274 | $ 809,107 | $ (54,806) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 136,209 | 136,209 | ||||||
Other comprehensive loss, net of tax expense | (16,383) | (16,383) | ||||||
Exercise of stock options (in shares) | 68,601 | |||||||
Exercise of stock options | 2,880 | $ 1 | 2,879 | |||||
Issuance of shares under employee stock purchase plan (in shares) | 58,145 | |||||||
Issuance of shares under employee stock purchase plan | 4,232 | $ 1 | 4,231 | |||||
Redemption of 3.25% Convertible Note including tax impact (in shares) | 3,050,850 | |||||||
Redemption of 3.25% Convertible Note including tax impact | 44,222 | $ 31 | 44,191 | |||||
Issuance of/ vested restricted stock, net (in shares) | 546,684 | |||||||
Issuance of/ vested restricted stock, net | 0 | $ 5 | (5) | |||||
Repurchase and retirement of common stock (in shares) | (245,083) | |||||||
Repurchase and retirement of common stock | (29,855) | $ (3) | (15,825) | (14,027) | ||||
Share-based compensation | 19,119 | 19,119 | ||||||
Other, net | (2,183) | (2,371) | 188 | |||||
Ending balance (in shares) at Sep. 30, 2021 | 47,825,827 | |||||||
Ending balance at Sep. 30, 2021 | 1,369,259 | $ 478 | 508,493 | 931,477 | (71,189) | |||
Beginning balance (in shares) at Jun. 30, 2021 | 44,708,235 | |||||||
Beginning balance at Jun. 30, 2021 | 1,294,500 | $ 447 | 461,422 | 892,605 | (59,974) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 42,569 | 42,569 | ||||||
Other comprehensive loss, net of tax expense | (11,215) | (11,215) | ||||||
Exercise of stock options (in shares) | 23,250 | |||||||
Exercise of stock options | 1,549 | 1,549 | ||||||
Redemption of 3.25% Convertible Note including tax impact (in shares) | 3,031,817 | |||||||
Redemption of 3.25% Convertible Note including tax impact | 44,223 | $ 31 | 44,192 | |||||
Issuance of/ vested restricted stock, net (in shares) | 112,166 | |||||||
Issuance of/ vested restricted stock, net | 0 | $ 1 | (1) | |||||
Repurchase and retirement of common stock (in shares) | (49,641) | |||||||
Repurchase and retirement of common stock | (6,921) | $ (1) | (3,035) | (3,885) | ||||
Share-based compensation | 6,755 | 6,755 | ||||||
Other, net | (2,201) | (2,389) | 188 | |||||
Ending balance (in shares) at Sep. 30, 2021 | 47,825,827 | |||||||
Ending balance at Sep. 30, 2021 | $ 1,369,259 | $ 478 | 508,493 | 931,477 | (71,189) | |||
Beginning balance (in shares) at Dec. 31, 2021 | 47,440,137 | 47,440,137 | ||||||
Beginning balance at Dec. 31, 2021 | $ 1,967,732 | $ (64,701) | $ 474 | 509,122 | $ (88,137) | 1,515,358 | $ 23,436 | (57,222) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (3,714) | (3,714) | ||||||
Other comprehensive loss, net of tax expense | (51,396) | (51,396) | ||||||
Exercise of stock options (in shares) | 5,439 | |||||||
Exercise of stock options | 148 | 148 | ||||||
Issuance of shares under employee stock purchase plan (in shares) | 76,741 | |||||||
Issuance of shares under employee stock purchase plan | 5,235 | $ 1 | 5,234 | |||||
Issuance of/ vested restricted stock, net (in shares) | 456,963 | |||||||
Issuance of/ vested restricted stock, net | 0 | $ 4 | (4) | |||||
Repurchase and retirement of common stock (in shares) | (789,373) | |||||||
Repurchase and retirement of common stock | (76,545) | $ (7) | (14,881) | (61,657) | ||||
Share-based compensation | 20,806 | 20,806 | ||||||
Other, net | $ (3,920) | (16) | (3,904) | |||||
Ending balance (in shares) at Sep. 30, 2022 | 47,189,907 | 47,189,907 | ||||||
Ending balance at Sep. 30, 2022 | $ 1,793,645 | $ 472 | 432,272 | 1,469,519 | (108,618) | |||
Beginning balance (in shares) at Jun. 30, 2022 | 47,191,337 | |||||||
Beginning balance at Jun. 30, 2022 | 1,794,196 | $ 472 | 426,104 | 1,451,316 | (83,696) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 18,185 | 18,185 | ||||||
Other comprehensive loss, net of tax expense | (24,922) | (24,922) | ||||||
Issuance of/ vested restricted stock, net (in shares) | 1,171 | |||||||
Repurchase and retirement of common stock (in shares) | (2,601) | |||||||
Repurchase and retirement of common stock | (200) | (218) | 18 | |||||
Share-based compensation | $ 6,386 | 6,386 | ||||||
Ending balance (in shares) at Sep. 30, 2022 | 47,189,907 | 47,189,907 | ||||||
Ending balance at Sep. 30, 2022 | $ 1,793,645 | $ 472 | $ 432,272 | $ 1,469,519 | $ (108,618) |
Condensed Consolidated Statem_7
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jan. 01, 2022 | Nov. 15, 2019 | Jun. 10, 2014 | |
Tax expense (benefit) for unrealized holding gain (loss) on available-for-sale investments | $ 0 | $ 37,000 | $ 0 | $ 37,000 | ||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2020-06 [Member] | |||||||
3.25% Convertible Notes | Convertible Debt | ||||||||
Stated interest rate | 3.25% | |||||||
1.75% Convertible Notes | Convertible Debt | ||||||||
Stated interest rate | 1.75% | 1.75% |
Basis of Presentation and Overv
Basis of Presentation and Overview | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Overview | Basis of Presentation and Overview The accompanying Condensed Consolidated Financial Statements of Ziff Davis, Inc. and its subsidiaries (“Ziff Davis”, the “Company”, “our”, “us”, or “we”), whether directly or indirectly wholly-owned, 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 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”). The 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 date of the Condensed Consolidated Financial Statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. All normal recurring adjustments necessary for a fair presentation of these interim Condensed Consolidated Financial Statements were made. This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission ("SEC") on March 15, 2022 and other 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 Ziff Davis, Inc. is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, entertainment, shopping, health, cybersecurity, and martech. Our Digital Media business specializes in the technology, shopping, gaming, and healthcare markets, offering content, tools and services to consumers and businesses. Our Cybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cybersecurity, privacy and marketing technology. On October 7, 2021, in connection with the spin-off of its cloud fax business described further below, the Company changed its name from J2 Global, Inc. to Ziff Davis, Inc. Additionally, starting October 8, 2021, the Company’s common stock began trading under the stock symbol “ZD.” Discontinued Operations On October 7, 2021, the Company completed the separation of its cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“Consensus”). The Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution. The Company’s stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock. Ziff Davis, Inc., formerly J2 Global, Inc., retained a 19.9% interest in Consensus following the Separation (the “Investment in Consensus”). The accounting requirements for reporting the Company’s cloud fax business as a discontinued operation were met when the Separation was completed. Accordingly, the Condensed Consolidated Financial Statements reflect the results of the cloud fax business as a discontinued operation for all periods presented. Ziff Davis did not retain a controlling interest in Consensus. On June 9, 2022, the Company entered into an agreement with certain selling shareholders of Consensus who executed an underwritten public offering pursuant to a registration statement filed by Consensus with the SEC for 2,000,000 shares of its common stock (including a 30-day option for the underwriters to purchase from the selling shareholders an additional 300,000 shares at the public offering price less the underwriting discount). On June 10, 2022, the Company entered into a Fifth Amendment to its existing Credit Agreement, providing for the issuance of a senior secured term loan under the Credit Agreement (the “Term Loan Facility”), in an aggregate principal amount of approximately $90.0 million. During June 2022, the Company subsequently completed a non-cash exchange of the 2,300,000 shares of its common stock of Consensus with the selling shareholders to settle the Company’s obligations of $90.0 million outstanding aggregate principal amount of the Term Loan Facility plus related interest and the corresponding underwriting fees. On September 14, 2022, the Company entered into an agreement with certain selling shareholders of Consensus who executed an underwritten public offering pursuant to a registration statement filed by Consensus with the SEC for 500,000 shares of its common stock. On September 15, 2022, the Company entered into a Sixth Amendment to its existing Credit Agreement, providing for the issuance of a senior secured term loan under the Credit Agreement (the “Term Loan Two Facility”, together with the Term Loan Facility, collectively, “Term Loan Facilities”), in an aggregate principal amount of approximately $22.3 million. During September 2022, the Company subsequently completed a non-cash exchange of the 500,000 shares of its common stock of Consensus with the selling shareholders to settle the Company’s obligations of $22.3 million outstanding aggregate principal amount of the Term Loan Two Facility plus related interest and the corresponding underwriting fees. Refer to Note 8 - Debt for further discussion. As of September 30, 2022, the Company continues to hold approximately 1.2 million shares of common stock of Consensus (the “Retained Consensus Shares”). The Investment in Consensus represents the investment in equity securities for which the Company elected the fair value option and subsequent fair value changes in the Consensus shares are included in the assets of and results from continuing operations. Refer to Note 4 - Investments and Note 5 - Discontinued Operations for additional information. Allowances for Credit Losses The Company maintains an allowance for credit losses on accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expenses in the Condensed Consolidated Statements of Operations. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when it identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status. It also considers customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. On an ongoing basis, management evaluates the adequacy of these reserves. Revenue Recognition The Company recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Refer to Note 2 - Revenues for additional details. Principal vs. Agent The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If 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 under Topic 606 for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer, (ii) whether the Company controls the specified goods or services prior to transferring control to the customer and (iii) whether the Company has discretion on pricing. Sales Taxes The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer. Investments We account for our investments in debt securities in accordance with ASC Topic 320, Investments - Debt Securities (“ASC 320”) . Our debt investments are typically comprised of corporate debt securities, which are classified as available-for-sale. Available-for-sale securities are carried at fair value with unrealized gains and losses included in other comprehensive income. All debt securities are accounted for on a specific identification basis. The Company’s available-for-sale debt securities are carried at an estimated fair value with any unrealized gains or losses, net of taxes, included in accumulated other comprehensive loss on our Condensed Consolidated Balance Sheets. Available-for-sale debt securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses. Expected credit losses on available-for-sale debt securities are recognized in loss on investments, net on our Condensed Consolidated Statements of Operations, and any remaining unrealized losses, net of taxes, are included in accumulated comprehensive loss on our Condensed Consolidated Balance Sheets. We account for investments in equity securities in accordance with ASC Topic 321, Investments - Equity Securities (“ASC 321”) , which requires the accounting for equity investments, other than those accounted for under the equity method of accounting, generally be measured at fair value for equity securities with readily determinable fair values. Equity securities without a readily determinable fair value, which are not accounted for under the equity method of accounting, are measured at their cost, less impairment, if any, and adjusted for observable price changes arising from orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported within earnings on the Condensed Consolidated Statements of Operations. We assess whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions. Refer to Note 4 - Investments for additional information. The Retained Consensus Shares are equity securities accounted for at fair value under the fair value option, and the related fair value gains and losses are recognized in earnings. As the initial carrying value of the Retained Consensus Shares was negative immediately following the Separation, the Company elected the fair value option under ASC 825-10-25 to support the initial recognition of the Retained Consensus Shares at fair value and the negative book value was recorded as a gain at the date of Separation. The fair value of Consensus common stock is readily available as Consensus is a publicly traded company. Variable Interest Entities (“VIEs”) A VIE requires consolidation by the entity’s primary beneficiary. The Company evaluates its investments in entities in which it is involved to determine if the entity is a VIE and if so, whether it holds a variable interest and is the primary beneficiary. The Company has determined that it holds a variable interest in its investment as a limited partner in the OCV Fund I, LP (“OCV Fund”, “OCV” or the “Fund”) and in Group Black, Inc. (“Group Black”). In determining whether the Company is deemed to be the primary beneficiary of the VIE, both of the following characteristics must be present: a) the Company has the power to direct the activities of the VIE that most significantly impacts the VIEs economic performance (the power criterion); and b) the Company has the obligation to absorb losses of the VIE, or the right to receive benefits of the VIE, that could potentially be significant to the VIE (the economic criterion). The Company has concluded that, as a limited partner, although the obligations to absorb losses or the right to benefit from the gains is not insignificant, the Company does not have “power” over OCV because it does not have the ability to direct the significant decisions which impact the economics of OCV. The Company believes that the OCV general partner, as a single decision maker, holds the ability to make the decisions about the activities that most significantly impact the OCV Fund’s economic performance. As a result, the Company has concluded that it will not consolidate OCV, as it is not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting (see Note 4 - Investments ). OCV qualifies as an investment company under ASC Topic 946, Financial Services, Investment Companies (“ASC 946”). Under ASC Topic 323, Investments - Equity Method and Joint Ventures, an investor that holds investments that qualify for specialized industry accounting for investment companies in accordance with ASC 946 should record its share of the earnings or losses, realized or unrealized, as reported by its equity method investees in the Condensed Consolidated Statements of Operations. The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline. Ziff Davis has variable interests in Group Black. Group Black is a limited partnership and is managed by its Board of Directors. As of September 30, 2022, the Company does not have voting rights in the investee and lacks the power and the ability to control or direct the significant economic operations of the investee. Ziff Davis is not a primary beneficiary and does not consolidate the entity under either the VIE model or the voting interest (“VOE”) model. Refer to Note 4 - Investments for additional detail. Impairment or Disposal of Long-Lived Assets The Company accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of ASC Topic. 360, Property, Plant, and Equipment (“ASC 360”), which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to the expected undiscounted future net cash flows generated by the asset. If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extent of the difference. The Company assesses the impairment of identifiable definite-lived intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors it considers important which could individually or in combination trigger an impairment include the following: • Significant underperformance relative to expected historical or projected future operating results; • Significant changes in the manner of our use of the acquired assets or the strategy for the Company’s overall business; • Significant negative industry or economic trends; • Significant decline in the Company’s stock price for a sustained period; and • The Company’s market capitalization relative to net book value. If the Company determined that the carrying value of definite-lived intangibles and long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, it would record an impairment equal to the excess of the carrying amount of the asset over its estimated fair value. The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of definite-lived assets may not be recoverable. During the nine months ended September 30, 2022, the Company did not have any events or circumstances indicating impairment of long-lived assets, other than the recording of an impairment of certain operating lease right-of-use assets in the amount of $0.4 million. During the nine months ended September 30, 2021, the Company recorded impairments of $9.4 million on its operating lease right of use assets primarily related to exiting certain lease space as the Company regularly evaluates its office space requirements in light of more of its workforce working from home as part of a permanent “remote” or “partial remote” work model. The impairment is presented in general and administrative expense on the Condensed Consolidated Statement of Operations. The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable and the transfer is expected to qualify for recognition as a sale within one year, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale. Business Combinations and Valuation of Goodwill and Intangible Assets The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired. Such estimates may be based on significant unobservable inputs and assumptions such as, but not limited to, future revenue growth rates, gross and operating margins, customer attrition rates, royalty rates, discount rates and terminal growth rate assumptions. The Company uses established valuation techniques and may engage reputable valuation specialists to assist with the valuations. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from one Goodwill and Intangible Assets for further details. Contingent Consideration Certain of the Company’s acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future income thresholds or other metrics. The contingent earn-out arrangements are based upon the Company’s valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved. The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the Condensed Consolidated Balance Sheets. The Company considers several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former shareholders of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of the Company’s other key employees. The contingent earn-out payments are not affected by employment termination. The Company measures its contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 6 - Fair Value Measurements ). The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses a probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and 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 Condensed Consolidated Statements of Cash Flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities. The Company reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior amounts. Changes in the estimated fair value of its contingent earn-out liabilities and adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in general and administrative expenses on the Condensed Consolidated Statements of Operations. Income Taxes The Company’s income is subject to taxation in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves for tax contingencies are established when the Company believes that certain positions might be challenged despite the Company’s belief that its tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. The valuation allowance is reviewed quarterly based upon the facts and circumstances known at the time. In assessing this valuation allowance, the Company reviews historical and future expected operating results and other factors, including its recent cumulative earnings experience, expectations of future taxable income by taxing jurisdiction and the carryforward periods available for tax reporting purposes, to determine whether it is more likely than not that deferred tax assets are realizable. ASC 740 provides guidance on the minimum threshold that an uncertain income tax benefit is required to meet before it can be recognized in the financial statements and applies to all income tax positions taken by a company. ASC 740 contains a two-step approach to recognizing and measuring uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain income tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company recognizes accrued interest and penalties related to uncertain income tax positions in income tax expense on its Condensed Consolidated Statements of Operations. On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA included many climate and energy provisions and introduced a 15 percent corporate alternative minimum tax (“CAMT”) for taxpayers whose average annual adjusted financial statement income exceeds a certain threshold. The IRA also enacted a one percent excise tax on stock repurchases made by publicly traded U.S. corporations. The CAMT and excise tax on stock repurchases are effective for tax years beginning after December 31, 2022. The Company does not believe that it will be subject to the CAMT as it is expected to be under the threshold of the average annual adjusted financial statement income. Share-Based Compensation We account for share-based awards to employees and non-employees in accordance with the provisions of ASC Topic 718, Compensation - Stock Compensation (“ASC 718”), which requires compensation cost, measured at the grant date fair value, to be recognized over the employee’s requisite service period using the straight-line method. The measurement of share-based compensation expense is based on several criteria, including but not limited to the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate, dividend rate and award cancellation rate. These inputs are subjective and are determined using management’s judgment. If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, we may change the input factors used in determining future share-based compensation expense. Any such changes could materially impact the results of operations in the period in which the changes are made and in periods thereafter. We estimate the vesting term based upon the historical exercise behavior of our employees. Earnings Per Common Share (“EPS”) On January 1, 2022, the Company adopted Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) using the modified retrospective method. Following this adoption, the Company applies the if-converted method for the diluted net income per share calculation of convertible debt instruments. Prior to the adoption, the Company used the treasury stock method when calculating the potential dilutive effect of convertible debt instruments. Recent Accounting Pronouncements Recently issued applicable accounting pronouncements not yet adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This update provides for optional financial reporting alternatives to reduce cost and complexities associated with accounting for contracts, hedging relationships, and other transactions affected by reference rate reform. This update applies only to contracts, hedging relationships, and other transactions that reference London Interbank Offer Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The accommodations are available for all entities through December 31, 2022, with early adoption permitted. We are currently evaluating the effect the adoption of this update will have on our condensed consolidated Recently adopted accounting pronouncements In August 2020, the FASB issued ASU 2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) . The provisions of this update simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt - Debt with Conversion and Other Options , for convertible instruments. The convertible debt instruments will be accounted for as a single liability at the amortized cost if separation is no longer required unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change is expected to reduce reported noncash interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities. Similarly, the debt discount, that is equal to the carrying value of the embedded conversion feature upon issuance, will no longer be amortized into income as interest expense over the life of the instrument. Additionally, ASU No. 2020-06 requires the use of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards . On January 1, 2022, the Company adopted ASU 2020-06 In October 2021, the FASB issued Accounting Standards Update (“ASU 2021-08”), Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606. This update is effective for fiscal years and interim |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Digital Media Digital Media revenues are earned primarily from the delivery of advertising services and from subscriptions to services and information. Revenue is earned from the delivery of advertising services on websites that are owned and operated by us and on those websites that are part of Digital Media’s advertising network. Depending on the individual contracts with the customer, revenue for these services is recognized over the contract period when any of the following performance obligations are satisfied: (i) when an advertisement is placed for viewing, (ii) when a qualified sales lead is delivered, (iii) when a visitor “clicks through” on an advertisement or (iv) when commissions are earned upon the sale of an advertised product. Revenue from subscriptions is earned through the granting of access to, or delivery of, data products or services to customers. Subscriptions cover video games and related content, health information, data and other copyrighted material. Revenues under such agreements are recognized over the contract term for use of the service. Revenues are also earned from listing fees, subscriptions to online publications, and from other sources. Subscription revenues are recognized over time. We also generate Digital Media subscription revenues through the license of certain assets to clients. Assets are licensed for clients’ use in their own promotional materials or otherwise and may include logos, editorial reviews, or other copyrighted material. Revenues under such license agreements are recognized over the contract term for use of the asset. In instances when technology assets are licensed to our clients, revenues from the license of these assets are recognized over the term of the access period. The Digital Media business also generates revenue from other sources which include marketing and production services. Such other revenues are generally recognized over the period in which the products or services are delivered. We also generate Digital Media revenues from transactions involving the sale of perpetual software licenses, related software support and maintenance, hardware used in conjunction with its software, and other related services. Revenue is recognized for these software transactions with multiple performance obligations after (i) the contract has been approved and we are committed to perform the respective obligations and (ii) we can identify and quantify each obligation and its respective selling price. Once the respective performance obligations have been identified and quantified, revenue will be recognized when the obligations are met, either over time or at a point in time depending on the nature of the obligation. Revenues from software license performance obligations are generally recognized upfront at the point in time that the software is made available to the customer to download and use. Revenues for related software support and maintenance performance obligations are related to technical support provided to customers as needed and unspecified software product upgrades, maintenance releases and patches during the term of the support period when they are available. We are obligated to make the support services available continuously throughout the contract period. Therefore, revenues for support contracts are generally recognized ratably over the contractual period the support services are provided. Hardware product and related software performance obligations, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a bundled performance obligation. The revenues for this bundled performance obligation are generally recognized at the point in time that the hardware and software products are delivered and ownership is transferred to the customer. Other service revenues are generally recognized over time as the services are performed. The Company records revenue on a gross basis with respect to revenue generated (i) by the Company serving online display and video advertising across its owned and operated web properties, on third-party sites or on unaffiliated advertising networks; (ii) through the Company’s lead-generation business; and (iii) through the Company’s subscriptions. The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party sites. Cybersecurity and Martech The Company’s Cybersecurity and Martech revenues substantially consist of subscription revenues which include subscription, usage-based and licensing fees, a significant portion of which are paid in advance. The Company defers the portions of monthly, quarterly, semi-annual and annual fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned. Along with its numerous proprietary Cybersecurity and Martech solutions, the Company also generates subscription revenues by reselling various third-party solutions, primarily through its email security line of business. These third-party solutions, along with the Company’s proprietary products, allow it to offer customers a variety of solutions to better meet the customer’s needs. The Company records revenue on a gross basis with respect to reseller revenue because the Company has control of the specified good or service prior to transferring control to the customer. Revenues from external customers classified by revenue source are as follows (in thousands). See Note 14 - Segment Information for additional information. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Digital Media Advertising $ 186,921 $ 198,794 $ 546,186 $ 574,465 Subscription 64,780 52,010 179,257 145,935 Other 12,195 11,625 31,980 22,880 Total Digital Media revenues $ 263,896 $ 262,429 $ 757,423 $ 743,280 Cybersecurity and Martech Subscription $ 78,192 $ 93,071 $ 237,596 $ 265,580 Total Cybersecurity and Martech revenues $ 78,192 $ 93,071 $ 237,596 $ 265,580 Elimination of inter-segment revenues (215) (356) (722) (766) Total Revenues $ 341,873 $ 355,144 $ 994,297 $ 1,008,094 Timing of revenue recognition Point in time $ 14,417 $ 13,607 $ 32,602 $ 30,669 Over time 327,456 341,537 961,695 977,425 Total $ 341,873 $ 355,144 $ 994,297 $ 1,008,094 The Company has recorded $32.2 million and $27.7 million of revenue for the three months ended September 30, 2022 and 2021, respectively, and $154.9 million and $140.4 million of revenue for the nine months ended September 30, 2022 and 2021, respectively, which was previously included in the deferred revenue balance as of the beginning of each respective year. As of September 30, 2022 and December 31, 2021, the Company acquired $21.3 million and $9.5 million respectively, of deferred revenue in connection with the Company’s business acquisitions, which are subject to purchase accounting adjustments, as appropriate. Refer to Note 3 - Business Acquisitions for details. Performance Obligations We are often a party to multiple concurrent contracts with the same customer, or a party related to that customer. These situations require judgment to determine if those arrangements should be accounted for as a single contract. Consideration of both the form and the substance of the arrangement is required. The Company’s contracts with customers may include multiple performance obligations, including complex contracts when advertising and licensing services are sold together. We determine the transaction price based on the amount to which we expect to be entitled in exchange for services provided. We include any fixed consideration within our contracts as part of the total transaction price. Our contracts occasionally contain some component of variable consideration, which is often immaterial and estimated. We do not include 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. The transaction price is allocated to each performance obligation based on its relative standalone selling price, which is determined at contract inception. In these instances, the Company determines its standalone selling prices based on the prices at which the Company separately sells each service. The Company satisfies its performance obligations within the Digital Media business upon delivery of services to its customers. In addition, the Company provides content to its advertising partners which the Company sells to its partners’ customer base and receives a revenue share based on the terms of the agreement. The Company satisfies its performance obligations within the Cybersecurity and Martech business upon delivery of services to its customers. Payment terms vary by type and location of our customers and the services offered. The time between invoicing and when payment is due is not significant. Due to the nature of the services provided, there are no obligations for returns. Significant Judgments Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is also required to determine the standalone selling price for each distinct performance obligation. Performance Obligations Satisfied Over Time Our Digital Media business consists primarily of performance obligations that are satisfied over time. This was determined based on a review of the contracts and the nature of the services offered, where the customer simultaneously receives and consumes the benefit of the services provided. Satisfaction of these performance obligations is evidenced in the following ways: Advertising • Website reporting by the Company, the customer, or a third-party contains the delivery evidence needed to satisfy the performance obligations within the advertising contract • Successfully delivered leads are evidenced by either delivery reports from the Company’s internal lead management systems or through e-mail communication and/or other evidence of delivery showing acceptance of leads by the customer • Commission is evidenced by direct site reporting from the affiliate or via direct confirmation from the customer Subscription • Evidence of delivery is contained in the Company’s systems or from correspondence with the customer which tracks when a customer accepts delivery of any assets, digital keys or download links Revenue is recognized based on delivery of services over the contract period for advertising and on a straight-line basis over the contract period for subscriptions. We believe that the methods described are a faithful depiction of the transfer of goods and services. Our Cybersecurity and Martech business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following materially distinct performance obligations are satisfied: • Voice, email marketing and search engine optimization as services are delivered • Consumer privacy services and data backup capabilities are provided • Security solutions, including email and endpoint are provided • Faxing capabilities are provided (included in discontinued operations through October 7, 2021) The Company has concluded the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period, or as usage occurs, and believes that the method used is a faithful depiction of the transfer of goods and services. Performance Obligations Satisfied at a Point in Time The Company’s Digital Media business has technology subscriptions that have standalone functionality. As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time. This is evidenced once a digital key is delivered to the customer. Once the key is delivered to the customer, the customer has full control of the technology and the Company has no further performance obligations. The Company has concluded that revenue is recognized once the digital key is delivered. The Company believes that this method is a faithful depiction of the transfer of goods and services. Transaction Price Allocation to Future Performance Obligations As of September 30, 2022, the aggregate amount of transaction price that is allocated to our performance obligations was approximately $24.0 million and is expected to be recognized as follows: 20% by December 31, 2022, 78% by December 31, 2023 and the rest thereafter. The amount disclosed does not include revenues related to performance obligations that are part of a contract with original expected duration of 12 months or less or portions of the contract that remain subject to cancellations. |
Business Acquisitions
Business Acquisitions | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Acquisitions | Business Acquisitions The Company uses acquisitions as a strategy to grow its customer base by increasing its presence in new and existing markets, expand and diversify its service offerings, enhance its technology, and acquire skilled personnel. 2022 Acquisitions The Company completed the following acquisitions during the nine months ended September 30, 2022, paying the purchase price in cash in each transaction: (a) a share purchase of Lifecycle Marketing Group Limited, acquired on January 21, 2022, a United Kingdom-based portfolio of pregnancy and parenting brands, including Emma’s Diary and Health Professional Academy, reported within our Digital Media segment; (b) a share purchase of FitNow, Inc, acquired on June 2, 2022, a Massachusetts-based provider of weight loss products and support, reported within our Digital Media segment; and (c) four immaterial Digital Media acquisitions. The Condensed Consolidated Statement of Operations since the date of each acquisition and the Condensed Consolidated Balance Sheets as of September 30, 2022, reflect the results of operations of all 2022 acquisitions. For the nine months ended September 30, 2022, these acquisitions contributed $19.6 million to the Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to the Company’s integration activities and is impracticable to provide. Total consideration for these transactions was $121.7 million net of cash acquired and assumed liabilities and is subject to certain post-closing adjustments which may increase or decrease the final consideration paid. The following table summarizes the preliminary allocation of the purchase consideration for all 2022 acquisitions as of September 30, 2022 (in thousands): Assets and Liabilities Valuation Accounts receivable $ 7,433 Prepaid expenses and other current assets 4,915 Property and equipment 369 Operating lease right-of-use assets, noncurrent 546 Trade names 12,838 Customer relationship 20,540 Goodwill 93,827 Other intangibles 18,165 Other long-term assets 11 Accounts payable and accrued expenses (4,656) Deferred revenue (21,332) Deferred tax liability (10,436) Other long-term liabilities (516) Total $ 121,704 The initial accounting for all of the 2022 acquisitions is incomplete due to timing of available information and is subject to change. The Company has recorded provisional amounts which may be based upon past acquisitions with similar attributes for certain intangible assets (including trade names, software and customer relationships), preliminary acquisition date working capital and related tax items. The fair value of the assets acquired includes accounts receivable of $7.4 million, of which none is expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with these acquisitions during the nine months ended September 30, 2022 was $93.8 million, of which $1.2 million is expected to be deductible for income tax purposes. During the nine months ended September 30, 2022, the purchase price accounting has been finalized for the following 2021 acquisitions: DailyOM, SEOmoz, Solutelia, LLC, Arthur L. Davis Publishing and two other immaterial Digital Media acquired businesses. During the nine months ended September 30, 2022, the Company also recorded adjustments to the initial working capital and to the purchase accounting of certain other prior period acquisitions due to the finalization of prior period acquisitions in the Digital Media business. These measurement period adjustments resulted in a net increase in goodwill of $4.9 million, which included a $3.2 million increase in connection with the unfavorable contract liability for an acquired contract. The unfavorable contract liability is expected to be accreted over 4 years. In addition, the Company recorded adjustments to the initial working capital and to the purchase accounting of certain prior period acquisitions due to the finalization of prior period acquisitions in the Cybersecurity and Martech businesses which resulted in a net decrease in goodwill of $0.1 million. Such adjustments had an immaterial impact on the amortization expense within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2022. Refer to Note 7 - Goodwill and Intangible Assets for additional information. Unaudited Pro Forma Financial Information for All 2022 Acquisitions The following unaudited pro forma information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had the Company and the acquired businesses been combined companies during the periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2021. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects. The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its 2022 acquisitions as if each acquisition had occurred on January 1, 2021 (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (unaudited) (unaudited) (unaudited) (unaudited) Revenues $ 342,173 $ 366,258 $ 1,010,600 $ 1,041,436 Net income (loss) from continuing operations $ 18,120 $ 4,925 $ (3,801) $ 23,369 Income (loss) per common share from continuing operations - Basic $ 0.39 $ 0.11 $ (0.08) $ 0.52 Income (loss) per common share from continuing operations - Diluted $ 0.39 $ 0.10 $ (0.08) $ 0.49 2021 Acquisitions The Company completed the following acquisitions during the nine months ended September 30, 2021, paying the purchase price in cash in each transaction: (a) an asset purchase of DailyOM, acquired on April 30, 2021, a California-based-based provider of health and wellness digital media, content and learning business; (b) a share purchase of SEOmoz, acquired on June 4, 2021, a Seattle-based provider of search engine optimization (“SEO”) solutions; (c) an asset purchase of Solutelia, LLC, acquired on July 15, 2021, a Colorado-based on-demand wireless telecommunications network monitoring and analysis, testing and optimization software business and related wireless telecommunications engineering services business; (d) a stock purchase of Arthur L. Davis Publishing, acquired on September 23, 2021, an Iowa-based digital nursing publication; and (e) three immaterial Digital Media acquisitions. The Condensed Consolidated Statement of Operations since the date of each acquisition and balance sheet as of September 30, 2021, reflect the results of operations of all 2021 acquisitions. For the nine months ended September 30, 2021, these acquisitions contributed $21.3 million to the Company’s revenues. Net income from continuing operations contributed by these acquisitions was not separately identifiable due to the Company’s integration activities and is impracticable to provide. Total consideration for these transactions was $134.3 million, net of cash acquired and assumed liabilities. The following table summarizes the allocation of the purchase consideration for all 2021 acquisitions as of September 30, 2021, including individually material acquisitions noted separately (in thousands): Assets and Liabilities Valuation Accounts receivable $ 4,577 Prepaid expenses and other current assets 2,585 Property and equipment 1,838 Operating lease right-of-use assets, noncurrent 5,888 Trade names 11,118 Customer relationship 13,396 Goodwill 84,019 Other intangibles 34,378 Other long-term assets 62 Deferred tax asset 231 Accounts payables and accrued expenses (2,891) Deferred revenue (7,806) Operating lease liabilities, current (7,191) Other current liabilities (14) Deferred tax liability (4,122) Other long-term liabilities (1,726) Total $ 134,342 Unaudited Pro Forma Financial Information for All 2021 Acquisitions The following unaudited pro forma information is not necessarily indicative of the Company’s consolidated results of income in future periods or the results that actually would have been realized had the Company and the acquired businesses been combined companies during the periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2020. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects. The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its acquisitions during the three months and nine months ended September 30, 2021 as if each acquisition had occurred on January 1, 2020 (in thousands, except per share amounts): Three Months Ended September 30, 2021 Nine months ended September 30, 2021 (unaudited) (unaudited) Revenues $ 374,202 $ 1,045,184 Net income from continuing operations $ 6,886 $ 25,490 Income per common share from continuing operations - Basic $ 0.15 $ 0.56 Income per common share from continuing operations - Diluted $ 0.14 $ 0.54 SEOmoz Acquisition On June 4, 2021, the Company acquired all the outstanding issued capital of SEOmoz at a purchase consideration of $67.0 million, net of cash acquired and assumed liabilities. SEOmoz is a provider of search engine optimization (“SEO”) solutions. The Consolidated Statement of Operations since the date of acquisition and balance sheet as of December 31, 2021, reflect the results of operations of SEOmoz. For the nine months ended September 30, 2021, SEOmoz contributed $14.4 million to the Company’s revenues. Net income from continuing operations contributed by SEOmoz since the acquisition date was not separately identifiable due to the Company’s integration activities and is impracticable to provide. The following table summarizes the allocation of the purchase consideration for the SEOmoz acquisition (in thousands): Assets and Liabilities Valuation Accounts receivable $ 3,278 Prepaid expenses and other current assets 2,512 Property and equipment 1,838 Operating lease right of use asset 5,888 Trade names 7,200 Customer relationships 5,000 Goodwill 41,192 Other intangibles 21,607 Other long-term assets 62 Accounts payables and accrued expenses (2,421) Other current liabilities (14) Deferred revenue (7,048) Operating lease liabilities, current (7,191) Deferred tax liability (4,122) Other long-term liabilities (785) Total $ 66,996 The fair value of the assets acquired includes accounts receivable of $3.3 million. The gross amount due under contracts is $3.6 million, of which $0.3 million is expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with this acquisition during the year ended December 31, 2021 is $41.2 million of which zero is expected to be deductible for income tax purposes. Unaudited Pro Forma Financial Information for SEOmoz Acquisition The following unaudited pro forma information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had the Company and the acquired business been combined companies during the periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from this business acquisition had it occurred on January 1, 2020. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the SEOmoz acquisition, net of the related tax effects. The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and SEOmoz as if the acquisition had occurred on January 1, 2020 (in thousands, except per share amounts): Three Months Ended September 30, 2021 Nine months ended September 30, 2021 (unaudited) (unaudited) Revenues $ 367,414 $ 1,028,545 Net income from continuing operations $ 6,610 $ 24,030 Income per common share from continuing operations - Basic $ 0.14 $ 0.53 Income per common share from continuing operations - Diluted $ 0.14 $ 0.51 |
Investments
Investments | 9 Months Ended |
Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Investments consist of equity and debt securities. There were no investments in an unrealized loss position as of September 30, 2022 and December 31, 2021. Investment in equity securities Investment in Consensus Investment in equity securities consists of publicly traded common stock of Consensus. During the three and nine months ended September 30, 2022, the Company completed the non-cash debt-for-equity exchanges of 500,000 shares and 2,800,000 shares, respectively, of its Investment in Consensus for the extinguishment of $22.3 million and $112.3 million, respectively, of principal of the Company’s Term Loan Facilities, and related interest. Gains (losses) on equity securities recognized in ‘Unrealized gain (loss) on short-term investments held at the reporting date’ consisted of the following (in thousands): Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Net gains (losses) during the period $ 4,672 $ (61,937) Less: gains (losses) on securities sold during the period 471 (47,772) Unrealized gains (losses) recognized during the period on equity securities held at the reporting date $ 4,201 $ (14,165) As of September 30, 2022, the Company holds approximately 1.2 million shares of the common stock of Consensus. Other investment During the second quarter of 2021, the Company recorded a $16.7 million impairment loss on certain equity securities related to a decline in value due to a pending sales transaction of an investee. The Company was not expected to recover the recorded cost of these securities and thus reduced such amount to what the Company expected to receive as a result of the sale. The Company subsequently sold these equity securities during fiscal year 2021. Investment in corporate debt securities 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, which upon conversion would represent an equity interest equal to at least 3%, on a fully converted basis, of the entity that issued the notes. This investment is included in ‘Long-term investments, net’ in our Condensed Consolidated Balance Sheets and is classified as available-for-sale and initially measured at its transaction price and subsequently remeasured at fair value, with unrealized gains and losses reported as a component of other comprehensive income. The table below summarizes the carrying value and the maximum exposure of Company’s investment in corporate debt securities as of September 30, 2022 (in thousands): September 30, 2022 Carrying value Maximum exposure Investment in corporate debt securities $ 15,000 $ 15,000 The Company’s maximum exposure to loss is limited to its proportional ownership in the investee. In addition, the Company is not required to contribute capital in an aggregate amount in excess of its capital commitment. The following table summarizes the gross unrealized gains and losses and fair values for investments classified as available-for-sale, with the unrealized gains and losses reported as a component of other comprehensive income (in thousands): Amortized Gross Gross Fair September 30, 2022 Investment in corporate debt securities $ 15,000 $ — $ — $ 15,000 Total $ 15,000 $ — $ — $ 15,000 The following table summarizes the Company’s corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands): September 30, 2022 December 31, 2021 Due within 1 year $ — $ — Due within more than 1 year but less than 5 years 15,000 — Due within more than 5 years but less than 10 years — — Due 10 years or after — — Total $ 15,000 $ — Equity method investment On September 25, 2017, the Company entered into a commitment to invest $200 million (approximately 76.6% of equity) in an investment fund (the “Fund”). The primary purpose of the Fund is to provide a limited number of select investors with the opportunity to realize long-term appreciation from public and private companies, with a particular focus on the technology and life science industries. The general activities of the Fund is to buy, sell, hold and otherwise invest in securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures and evidence of indebtedness; to exercise all rights, powers, privileges and other incidents of ownership or possession with respect to securities held or owned by the Fund; to enter into, make and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable or desirable to carry out the foregoing. The manager, OCV Management, LLC, and general partner of the Fund are entities with respect to which Richard S. Ressler, former Chairman of the Board of Directors (the “Board”) of the Company, is indirectly the majority equity holder. Mr. Ressler’s tenure with the Board ended as of May 10, 2022. As a limited partner in the Fund, prior to the settlement of certain litigation generally related to the Company’s investment in the Fund in January 2022, the Company paid an annual management fee to the manager equal to 2.0% of capital commitments. In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the Fund’s general partner would be entitled to a carried interest equal to 20%. The Fund has a six year investment period, subject to certain exceptions. The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy. At the time of the settlement of the litigation (see Note 9 – Commitments and Contingencies ), the Company had invested approximately $128.8 million in the Fund. In connection with the settlement of the litigation, among other terms, no further capital calls will be made in connection with the Company’s investment in the Fund, nor will any management fees be paid by the Company to the manager. As such, during the nine months ended September 30, 2022, the Company received no capital call notices from the manager of the Fund. During the nine months ended September 30, 2021, the Company received capital call notices from the manager of the Fund for $21.2 million, inclusive of certain management fees. Approximately $21.2 million was paid for capital call notices during the nine months ended September 30, 2021. During both the nine months ended September 30, 2022 and 2021, the Company received no distributions from OCV. The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag (including management fees) due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline. During the three months ended September 30, 2022 and 2021, the Company recognized an investment loss of $3.2 million and $1.9 million, net of tax benefit, respectively. During the nine months ended September 30, 2022 and 2021, the Company recognized an investment (loss) gain of $(10.1) million and $16.6 million, net of tax benefit (expense), respectively. The gains and losses were primarily the result of gains and losses in the underlying investments. During the three months ended September 30, 2022, the Company recognized no expense for management fees, and during three months ended September 30, 2021, the Company recognized expense for management fees of $0.8 million, net of tax benefit. During the nine months ended September 30, 2022 and 2021, the Company recognized expense for management fees of $1.5 million and $2.3 million, net of tax benefit, respectively. The following table discloses the carrying amount for the Company’s equity method investment (in thousands). These equity securities are included within ‘Long-term investments’ in the Condensed Consolidated Balance Sheets. September 30, 2022 December 31, 2021 Equity securities $ 109,228 $ 122,593 Maximum exposure to loss $ 109,228 $ 122,593 As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership. In addition, the Company is not required to contribute capital in an aggregate amount in excess of its capital commitment and any expected losses will not be in excess of the Capital Account. Finally, there are no call or put options, or other types of arrangements, which limit the Company’s ability to participate in losses and returns of the Fund. |
Discontinued Operations and Dis
Discontinued Operations and Dispositions | 9 Months Ended |
Sep. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations and Dispositions Consensus Spin-off As further described in Note 1 - Basis of Presentation and Overview , on October 7, 2021, the Separation of the cloud fax business was completed. The accounting requirements for reporting the Company’s cloud fax business as a discontinued operation were met when the Separation was completed as the Separation constituted a strategic shift that would have a major effect on the Company’s operations and financial results. Accordingly, the Condensed Consolidated Financial Statements reflect the results of the cloud fax business as a discontinued operation for the three and nine months ended September 30, 2021. The Condensed Consolidated Statements of Operations report discontinued operations separate from continuing operations. The Condensed Consolidated Statements of Comprehensive (Loss) Income, Condensed Consolidated Statements of Cash Flows (including Note 15 - Supplemental Cash Flow Information ), and Condensed Consolidated Statements of Stockholders’ Equity combine continuing and discontinued operations. The key components of cash flows from discontinued operations were as follows (in thousands): Nine Months Ended September 30, 2021 Capital expenditures $ 15,252 Depreciation and amortization $ 8,941 Deferred taxes $ 5,306 In connection with the Separation, Ziff Davis and Consensus entered into several agreements that govern the relationship of the parties following the Separation, which are further discussed in Note 17 - Related Party Transactions . Further, certain of the Company’s management and members of its board of directors resigned from the Company as of the date of distribution and joined Consensus. In addition, one of the Company’s members of senior management as of September 30, 2022 has served on the board of directors of Consensus since the date of distribution. The key components of income from discontinued operations were as follows (in thousands): Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Revenues $ 89,107 $ 263,386 Cost of revenues (14,605) (43,129) Sales and marketing (13,116) (40,032) Research, development and engineering (2,019) (5,635) General and administrative (8,237) (20,262) Interest expense and other (3,818) (4,017) Income before income taxes 47,312 150,311 Income tax expense (11,512) (36,606) Income from discontinued operations, net of income taxes $ 35,800 $ 113,705 B2B Back-up and Voice Asset Sales The Company completed the following dispositions that did not meet the criteria for discontinued operations. During the first quarter of 2021, the Company committed to a plan to sell certain Voice assets in the United Kingdom as they were determined to be non-core assets. Such assets were recorded within the Cybersecurity and Martech reportable segment. On February 9, 2021, in a cash transaction, the Company sold the Voice assets. The total gain recognized on the sale of these Voice assets was $2.8 million which was recorded in loss on sale of businesses on the Condensed Consolidated Statement of Operations in the nine months ended September 30, 2021. During the first quarter of 2021, the Company committed to a plan to sell its B2B Backup business as it was determined to be a non-core business. The B2B Backup business met the held for sale criteria, and accordingly, the assets and liabilities were presented as held for sale on the Consolidated Statement Balance Sheets at March 31, 2021 and June 30, 2021. The business is recorded within the Cybersecurity and Martech reportable segment. During the second quarter of 2021, the Company received an offer to purchase the B2B Backup business and management determined that the fair value of the business less cost to sell was lower than its carrying amount. As a result, the Company recorded an impairment to goodwill of $32.6 million during the second quarter of 2021, which was recorded in impairment of business on the Consolidated Statement of Operations (see Note 7 - Goodwill and Intangible Assets ). On September 17, 2021, in a cash transaction, the Company sold the B2B Backup business. The total loss recognized on the sale of the B2B Backup business was $24.6 million which was recorded in loss on sale of businesses on the Condensed Consolidated Statement of Operations in the three and nine months ended September 30, 2021. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value. § Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. § Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. § Level 3 – Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices. The fair value of long-term debt is determined using recent quoted market prices or dealer quotes for each of the Company’s instruments, which are Level 1 inputs. The fair value of the Company’s debt instruments was approximately $0.9 billion and $1.3 billion, as of September 30, 2022 and December 31, 2021, respectively (see Note 8 - Debt ). The Retained Consensus Shares are equity securities for which the Company elected the fair value option, and the fair value of the Retained Consensus Shares and subsequent fair value changes are included in our assets of and results from continuing operations, respectively. As of September 30, 2022 and December 31, 2021, the Company’s investment in Consensus common stock was remeasured at fair value based on Consensus’ closing stock price with a balance of $54.9 million and $229.2 million included on the Condensed Consolidated Balance Sheets, respectively. Unrealized gain (loss) of $4.2 million and $(14.2) million were recorded on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022, respectively. The fair value of the investment in Consensus is determined using quoted market prices, which is a Level 1 input. The fair value of our 4.625% Senior Notes (as defined in Note 8 - 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. The fair value of the Credit Facility (as defined in Note 8 - Debt ) approximated its carrying amount due to its variable interest rate, which approximated a market interest rate, and was considered a Level 2 input. The investment in corporate debt securities is measured at fair value on our Condensed Consolidated Balance Sheets. Unrealized gains and losses are reported in other comprehensive income until realized. Corporate debt securities do not have a readily determinable fair value because acquired securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. The investment in corporate debt securities is classified as available-for-sale and is initially measured at its transaction price. The fair value of the corporate debt securities is determined primarily based in significant estimates and assumptions, including Level 3 inputs. As of September 30, 2022, the fair value of our investment in corporate debt securities approximates its carrying value due to close proximity of the date of the investment to the reporting date. Refer to Note 4 - Investments for additional information. The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. The valuation approaches used to value Level 3 investments considers unobservable inputs in the market such as time to liquidity, volatility, dividend yield, and breakpoints. Significant increases or decreases in either of the inputs in isolation would result in a significantly lower or higher fair value measurement. The following tables present the fair values of the Company’s financial assets or liabilities (in thousands): September 30, 2022 Level 1 Level 2 Level 3 Fair Value Carrying Value Assets: Cash equivalents: Money market and other funds $ 170,574 $ — $ — $ 170,574 $ 170,574 Investment in corporate debt securities — — 15,000 15,000 15,000 Investment in Consensus 54,897 — — 54,897 54,897 Total assets measured at fair value $ 225,471 $ — $ 15,000 $ 240,471 $ 240,471 Liabilities: Contingent consideration $ — $ — $ 1,106 $ 1,106 $ 1,106 Debt 891,852 — — 891,852 998,499 Total liabilities measured at fair value $ 891,852 $ — $ 1,106 $ 892,958 $ 999,605 December 31, 2021 Level 1 Level 2 Level 3 Fair Value Carrying Value Assets: Cash equivalents: Money market and other funds $ 144,255 $ — $ — $ 144,255 $ 144,255 Investment in Consensus 229,200 — — 229,200 229,200 Total assets measured at fair value $ 373,455 $ — $ — $ 373,455 $ 373,455 Liabilities: Contingent consideration $ — $ — $ 5,775 $ 5,775 $ 5,775 Debt 1,345,311 — — 1,345,311 1,090,627 Total liabilities measured at fair value $ 1,345,311 $ — $ 5,775 $ 1,351,086 $ 1,096,402 At the end of each reporting period, management reviews the inputs to the fair value measurements of financial and non-financial assets and liabilities to determine when transfers between levels are deemed to have occurred. For the nine months ended September 30, 2022 and 2021, there were no transfers that occurred between levels. The following table presents a reconciliation of the Company’s Level 3 financial assets related to our investment in corporate debt securities that are measured at fair value on a recurring basis (in thousands): Level 3 Affected line item in the Statement of Operations Balance as of January 1, 2022 $ — Investment in corporate debt securities 15,000 Not applicable Balance as of September 30, 2022 $ 15,000 The following table presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands): Level 3 Affected line item in the Statement of Operations Balance as of January 1, 2022 $ 5,775 Contingent consideration 555 Total fair value adjustments reported in earnings (2,305) General and administrative Contingent consideration payments (2,919) Not applicable Balance as of September 30, 2022 $ 1,106 In connection with the Company’s other acquisition activity, contingent consideration of up to $1.1 million ma y be payable upon achieving certain future earnings before interest, taxes, depreciation and amortization (EBITDA), revenue, and/or unique visitor thresholds and had a combined fair value of $1.1 million and $5.8 million at September 30, 2022 and December 31, 2021, respectively. Due to the achievement of certain thresholds, $2.9 million and $5.8 million was paid during the nine months ended September 30, 2022 and 2021, respectively. The Company’s non-financial assets, such as goodwill, intangible assets, right-of-use assets and property, plant and equipment, are adjusted to fair value only when an impairment is recognized. See Note 7 - Goodwill and Intangible Assets for further information. Such fair value measurements are based predominately on Level 3 inputs. See Note 7 - Goodwill and Intangible Assets for further information. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is assigned to the reporting unit that is expected to benefit from the synergies of the combination. Goodwill is tested for impairment annually on October 1st at the reporting unit level, or more frequently if indicators of impairment exist, or if a decision is made to dispose of a business. The Company’s Digital Media reportable segment is comprised of seven reporting units and the Cybersecurity and Martech reportable segment is comprised of two reporting units. The changes in carrying amounts of goodwill for the nine months ended September 30, 2022 are as follows (in thousands): Digital Media Cybersecurity and Martech Consolidated Balance as of January 1, 2022 $ 996,659 $ 534,796 $ 1,531,455 Goodwill acquired (Note 3) 93,827 — 93,827 Goodwill impairment (27,369) — (27,369) Purchase accounting adjustments (Note 3) 4,943 (137) 4,806 Foreign exchange translation (5,952) (16,810) (22,762) Balance as of September 30, 2022 $ 1,062,108 $ 517,849 $ 1,579,957 During the three months ended September 30, 2022, the Company reassessed the fair value of a reporting unit within the Digital Media reportable segment as a result of a forecasted reduction in revenue and EBITDA in that reporting unit, as well as an increase in interest rates and market volatility that would affect the Company’s assumptions on its discount rate. Based on the quantitative fair value test, the carrying value of the reporting unit exceeded its fair value at September 30, 2022, and the Company recorded an impairment of approximately $27.4 million during the three months ended September 30, 2022. The fair value of the reporting unit was determined using an equal weighting of an income approach that was based on the discounted estimated future cash flows of the reporting unit and a market approach that uses the guideline public company approach. We believe the combination of these approaches provides an accurate valuation because it incorporates the expected cash generation of the reporting unit in addition to how a third-party market participant would value the reporting unit. As the business is assumed to continue in perpetuity, the discounted future cash flows include a terminal value. Determining fair value using a discounted estimated future cash flow analysis requires the exercise of significant judgment with respect to several items, including the amount and timing of expected future cash flows and appropriate discount rates. The expected cash flows used in the discounted cash flow analyses were based on the most recent forecast for the reporting unit. For years beyond the forecast period, the estimates were based, in part, on forecasted growth rates. The discount rate the Company used represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in its reporting unit operations and the rate of return a market participant would expect to earn. Determining fair value using a market approach considers multiples of financial metrics based on trading multiples of a selected peer group of companies. From the comparable companies, a representative market multiple is determined, which is applied to financial metrics to estimate the fair value of the reporting unit. Following the impairment, this reporting unit had goodwill of approximately $86.9 million and the carrying value approximated its fair value. During the three months ended September 30, 2022, the Company realigned two reporting units within the Digital Media reportable segment. The Company re-allocated goodwill between the two identified reporting units based upon the relative fair value of the respective reporting units. Immediately before and immediately following this change in reporting units, the Company performed a quantitative fair value assessment using the income approach and market approach noted above, and each of these reporting units exceeded their respective carrying values and, therefore, there was no impairment to goodwill. During the nine months ended September 30, 2021, the Company recorded an impairment of approximately $32.6 million related to the Company’s B2B Backup business (included in the Cybersecurity and Martech reportable segment). In 2021, the Company received an offer to purchase the B2B Backup business and management determined that the fair value of that business less cost to sell was lower than its carrying amount. The fair value of the business was determined based upon the offer price. The fair value of the remaining reporting unit was determined using an equal weighting of an income approach and a market approach, and was in excess of the remaining carrying value of the reporting unit. Goodwill as of September 30, 2022 and December 31, 2021 reflects accumulated impairment losses of $27.4 million and zero, respectively, in the Digital Media reportable segment and reflects accumulated impairment losses of $32.6 million and $32.6 million, respectively, in the Cybersecurity and Martech reportable segment. Intangible Assets Subject to Amortization Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. The fair values of these identified intangible assets are based upon expected future cash flows or income, which take into consideration certain assumptions such as customer turnover, trade names and patent lives. These determinations are primarily based upon the Company’s historical experience and expected benefit of each intangible asset. If it is determined that such assumptions are not accurate, then the resulting change will impact the fair value of the intangible asset. Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from one As of September 30, 2022, intangible assets subject to amortization relate primarily to the following (in thousands): Weighted-Average Historical Accumulated Net Trade names 10.0 years $ 261,070 $ 119,026 $ 142,044 Customer relationships (1) 7.9 years 683,503 456,377 227,126 Other purchased intangibles 8.6 years 480,986 351,704 129,282 Total $ 1,425,559 $ 927,107 $ 498,452 (1) The Company amortizes customer relationship assets in a pattern that best reflects the pace at 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, 2021, intangible assets subject to amortization relate primarily to the following (in thousands): Weighted-Average Amortization Period Historical Accumulated Net Trade names 9.7 years $ 250,418 $ 102,657 $ 147,761 Customer relationships (1) 8.1 years 673,847 398,396 275,451 Other purchased intangibles 9.3 years 467,028 317,515 149,513 Total $ 1,391,293 $ 818,568 $ 572,725 (1) The Company amortizes customer relationship assets in a pattern that best reflects the pace at 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 and administrative expense on our Condensed Consolidated Statements of Operations, approximated $36.3 million and $46.6 million for the three months ended September 30, 2022 and 2021, respectively, and $119.3 million and $140.7 million for the nine months ended September 30, 2022 and 2021, respectively. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt The Company’s debt as of September 30, 2022 and December 31, 2021 consists of the following (in thousands): September 30, 2022 December 31, 2021 4.625% Senior Notes $ 460,038 $ 641,276 1.75% Convertible Notes 550,000 550,000 Total Notes 1,010,038 1,191,276 Less: Unamortized discount (2,837) (91,593) Deferred issuance costs (8,702) (9,056) Total debt 998,499 1,090,627 Less: current portion — (54,609) Total long-term debt, less current portion $ 998,499 $ 1,036,018 4.625% Senior Notes On October 7, 2020, the Company completed the issuance and sale of $750.0 million aggregate principal amount of its 4.625% senior notes due 2030 (the “4.625% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933. The Company received proceeds of $742.7 million after deducting the initial purchasers’ discounts, commissions and offering expenses. The net proceeds were used to redeem all of its outstanding 6.0% Senior Notes due in 2025 and, the remaining net proceeds were available for general corporate purposes which may include acquisitions and the repurchase or redemption of other outstanding indebtedness. These senior notes bear interest at a rate of 4.625% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2021. The 4.625% Senior Notes mature on October 15, 2030, and are senior unsecured obligations of the Company which are guaranteed, jointly and severally, on an unsecured basis by certain of the Company’s existing and future domestic direct and indirect wholly-owned subsidiaries (collectively, the “Guarantors”). If the Company or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an Insignificant Subsidiary (as defined in the indenture pursuant to which the 4.625% Senior Notes were issued (the “Indenture”)), after the issue date, or any Insignificant Subsidiary ceases to fit within the definition of Insignificant Subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Company’s obligations under the 4.625% Senior Notes. The Company may redeem some or all of the 4.625% Senior Notes at any time on or after October 15, 2025 at specified redemption prices plus accrued and unpaid interest, if any, up to, but excluding the redemption date. Before October 15, 2023, and following certain equity offerings, the Company also may redeem up to 40% of the 4.625% Senior Notes at a price equal to 104.625% of the principal amount, plus accrued and unpaid interest, if any, up to, but excluding the redemption date. The Company may make such redemption only if, after such redemption, at least 50% of the aggregate principal amount of the 4.625% Senior Notes remains outstanding. In addition, at any time prior to October 15, 2025, the Company may redeem some or all of the 4.625% Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium. The Indenture contains covenants that restrict the Company’s ability to (i) pay dividends or make distributions on the Company’s common stock or repurchase the Company’s capital stock; (ii) make certain restricted payments; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants contain certain exceptions. Restricted payments are applicable only if the Company and subsidiaries designated as restricted subsidiaries have a net leverage ratio of greater than 3.5 to 1.0. In addition, if such net leverage ratio is in excess of 3.5 to 1.0, the restriction on restricted payments is subject to various exceptions, including the total aggregate amount not 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 available. The Company is in compliance with its debt covenants for the 4.625% Senior Notes as of September 30, 2022. During the three and nine months ended September 30, 2022, the Company repurchased approximately $105.1 million and $181.2 million, respectively, in aggregate principal amount of the 4.625% Senior Notes for an aggregate purchase price of approximately $94.1 million and $167.7 million, respectively. For the three and nine months ended September 30, 2022, the Company recognized a gain of approximately $10.2 million and $12.1 million, respectively, associated with the repurchase of the 4.625% Senior Notes, which is recorded within ‘Gain on debt extinguishment, net’ on our Condensed Consolidated Statements of Operations. As of September 30, 2022 and December 31, 2021, the estimated fair value of the 4.625% Senior Notes was approximately $378.3 million and $659.9 million, and was based on recent quoted market prices for the 4.625% Senior Notes which are Level 1 inputs. Refer to Note 6 - Fair Value Measurements. 1.75% Convertible Notes On November 15, 2019, the Company issued $550.0 million aggregate principal amount of 1.75% convertible senior notes due November 1, 2026 (the “1.75% Convertible Notes”). The Company received proceeds of $537.1 million in cash, net of purchasers’ discounts and commissions and other debt issuance costs. A portion of the net proceeds were used to pay off all amounts outstanding under the then-existing Credit Facility. The 1.75% Convertible Notes bear interest at a rate of 1.75% per annum, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2020. The 1.75% Convertible Notes will mature on November 1, 2026, unless earlier converted or repurchased. Holders may surrender their 1.75% Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding July 1, 2026 only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on March 31, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding the calendar quarter is greater than 130% of the applicable conversion price of the 1.75% Convertible Notes on each such applicable trading day; (ii) during the five business day period following any 10 consecutive trading day period in which the trading price per $1,000 principal amount of 1.75% Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after July 1, 2026, and prior to the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their notes at any time, regardless of the foregoing circumstances. The Company will settle conversions of the 1.75% Convertible Notes by paying or delivering, as the case may be, cash, shares of the Company common stock or a combination thereof at the Company’s election. The Company currently intends to satisfy its conversion obligation by paying and delivering a combination of cash and shares of the Company’s common stock. Holders of the notes will have the right to require the Company to repurchase for cash all or any portion of their notes upon the occurrence of certain corporate events, subject to certain conditions. As of September 30, 2022 and December 31, 2021, the market trigger conditions did not meet the conversion requirements of the 1.75% Convertible Notes and, accordingly, the 1.75% Convertible Notes are classified as long-term debt on our Condensed Consolidated Balance Sheets. As of September 30, 2022, the conversion rate is 9.3783 shares of the Company’s common stock for each $1,000 principal amount of 1.75% Convertible Notes, which represents a conversion price of approximately $106.63 per share of the Company’s common stock. The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the 1.75% Convertible Notes, but will not be adjusted for accrued interest. In addition, upon the occurrence of a “Make-Whole Fundamental Change” (as defined in the 1.75% Convertible Note Indenture), the Company will increase the conversion rate for a holder that elects to convert its 1.75% Convertible Notes in connection with such a corporate event in certain circumstances. The Company may not redeem the 1.75% Convertible Notes prior to November 1, 2026, and no sinking fund is provided for the 1.75% Convertible Notes. The 1.75% Convertible Notes are the Company’s general senior unsecured obligations and rank: (i) senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 1.75% Convertible Notes; (ii) equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated; (iii) effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries. Accounting for the 1.75% Convertible Notes On January 1, 2022 the Company adopted ASU 2020-06 using the modified retrospective method. As a result of this adoption, the Company de-recognized the remaining unamortized debt discount of $87.3 million on the 1.75% Convertible Notes and therefore no longer recognizes any amortization of debt discounts as interest expense. Refer to Note 1 - Basis of Presentation and Overview . In connection with the issuance of the 1.75% Convertible Notes, the Company incurred $12.9 million of deferred issuance costs, which primarily consisted of the underwriters’ discount, legal and other professional service fees. Of the total deferred issuance costs incurred, $10.1 million of such deferred issuance costs were attributable to the liability component and are recorded within other assets and were being amortized to interest expense through the maturity date. The remaining $2.8 million of the deferred issuance costs were netted with the equity component in additional paid-in capital at the issuance date. Upon adoption of ASU 2020-06, the Company reclassified the $2.8 million from additional paid-in-capital to the long-term liability and recorded a cumulative adjustment to retained earnings for amortization from the issuance date through January 1, 2022 and will record amortization expense for these debt issuance costs through the maturity date. As of September 30, 2022, the total unamortized deferred issuance costs were $7.8 million. The 1.75% Convertible Notes are carried at face value less any unamortized debt discount (prior to adoption of ASU 2020-06) and issuance costs. The fair value of the 1.75% Convertible Notes at each balance sheet date is determined based on recent quoted market prices or dealer quotes for the 1.75% Convertible Notes, which are Level 1 inputs (see Note 6 - Fair Value Measurements ). If such information is not available, the fair value is determined using cash flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of September 30, 2022 and December 31, 2021, the estimated fair value of the 1.75% Convertible Notes was approximately $513.6 million and $685.4 million, respectively. 3.25% Convertible Notes On June 10, 2014, the Company issued $402.5 million aggregate principal amount of 3.25% convertible senior notes due June 15, 2029 (the “3.25% Convertible Notes”). The 3.25% Convertible Notes bore interest at a rate of 3.25% per annum, payable semiannually in arrears on June 15 and December 15 of each year. Beginning with the six-month interest period commencing on June 15, 2021, the Company had to pay contingent interest on the 3.25% Convertible Notes during any six-month interest period if the trading price per $1,000 principal amount of the 3.25% Convertible Notes for each of the five In connection with the Separation, the Company redeemed in full all of its outstanding 3.25% Convertible Notes. During the three and nine months ended September 30, 2021, the Company satisfied its conversion obligation by paying the principal of $399.6 million and $402.4 million, respectively, in cash and the Company issued 3,031,817 and 3,050,850 shares of the Company’s common stock during the three and nine months ended September 30, 2021, respectively (see Note 11 - Stockholders’ Equity ). Credit Facility On April 7, 2021, the Company entered into a $100.0 million Credit Agreement (the “Credit Agreement”). Subject to customary conditions, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250.0 million, for a total aggregate commitment of up to $350.0 million. The final maturity of the Credit Facility will occur on April 7, 2026. At the Company’s option, amounts borrowed under the Credit Agreement will bear interest at either (i) a base rate equal to the greater of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus 0.5% per annum, (y) the rate of interest per annum most recently announced by the Agent (as defined in the Credit Agreement) as its U.S. Dollar “Reference Rate” and (z) one month LIBOR plus 1.00% or (ii) a rate per annum equal to LIBOR divided by 1.00 minus the LIBOR Reserve Requirements (as defined in the Credit Agreement), in each case, plus an applicable margin. The applicable margin relating to any base rate loan will range from 0.50% to 1.25% and the applicable margin relating to any LIBOR loan will range from 1.50% to 2.25%, in each case, depending on the total leverage ratio of the Company. The Company is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty. As of September 30, 2022 and December 31, 2021, there were no amounts outstanding under the Credit Agreement. Debt-for-Equity Exchange On June 10, 2022 (the “Term Loan Funding Date”), the Company entered into a Fifth Amendment to its Credit Agreement with MUFG Union Bank, N.A, as administrative agent and collateral agent and the lenders party thereto to effectuate the debt-for-equity exchange. The Fifth Amendment to the Credit Agreement provided for the Term Loan Facility in an aggregate principal amount of $90.0 million and certain other changes to the Credit Agreement. The Term Loan Facility had a maturity date that was 60 days after the Term Loan Funding Date. The Term Loan Facility bore interest at a base rate equal to the greater of (x) the Federal Funds Effective Rate, as defined in the Credit Agreement, in effect on such day plus 0.5% per annum, (y) the rate of interest per annum most recently announced by the Agent, as defined in the Credit Agreement, as its U.S. Dollar "Reference Rate" and (z) one month LIBOR plus 1%, provided that the base rate for any term loan made under the Credit Agreement shall be greater of clause (x) and (y) above in each case. During June 2022, the Company borrowed approximately $90.0 million under the Term Loan Facility and completed the non-cash debt-for-equity exchange of 2,300,000 shares of its common stock of Consensus to settle its obligation of $90.0 million outstanding aggregate principal amount of the Term Loan Facility plus an immaterial amount of interest. On September 15, 2022 (the “Term Loan Two Funding Date”), the Company entered into a Sixth Amendment to its Credit Agreement with MUFG Union Bank, N.A, as administrative agent and collateral agent and the lenders party thereto to effectuate the debt-for-equity exchange. The Sixth Amendment to the Credit Agreement provided for the Term Loan Two Facility in an aggregate principal amount of approximately $22.3 million and certain other changes to the Credit Agreement. The Term Loan Two Facility had a maturity date that was 60 days after the Term Loan Two Funding Date. The Term Loan Two Facility bore interest at a base rate equal to the greater of (x) the Federal Funds Effective Rate, as defined in the Credit Agreement, in effect on such day plus 0.5% per annum, (y) the rate of interest per annum most recently announced by the Agent, as defined in the Credit Agreement, as its U.S. Dollar "Reference Rate" and (z) one month LIBOR plus 1%, provided that the base rate for any term loan made under the Credit Agreement shall be greater of clause (x) and (y) above in each case. During September 2022, the Company borrowed approximately $22.3 million under the Term Loan Two Facility and completed the non-cash debt-for-equity exchange of 500,000 shares of its common stock of Consensus to settle its obligation of $22.3 million outstanding aggregate principal amount of the Term Loan Two Facility plus an immaterial amount of interest. During the three and nine months ended September 30, 2022, the Company recorded a loss on extinguishment of debt of approximately $0.1 million and $0.6 million, respectively, related to the debt-for-equity exchanges, which is presented within ‘Gain on debt extinguishment, net’ on our Condensed Consolidated Statements of Operations. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation From time to time, the Company and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against the Company and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief. On July 8, 2020, Jeffrey Garcia filed a putative class action lawsuit against the Company in the Central District of California (20-cv-06906), alleging violations of federal securities laws. The Company has moved to dismiss the consolidated class action complaint. The court granted the motion to dismiss and the plaintiff has filed an amended complaint. The Company has 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 plaintiff has filed the notice of appeal. On September 24, 2020, International Union of Operating Engineers of Eastern Pennsylvania and Delaware filed an action lawsuit in the Delaware Court of Chancery (C.A. No. 2020-0819-VCL) asserting derivative claims for breach of fiduciary duty and related theories against directors of the Company and other third parties relating generally the investment by the Company in OCV Fund I, L.P. (the “Chancery Court Derivative Action”). On November 17, 2020, the court entered an order allowing Orlando Police Pension Fund to intervene as a plaintiff in the case. The parties have reached an agreement to settle the lawsuit, which requires court approval. On July 29, 2021, the parties filed a stipulation of settlement that provides the terms of the settlement and begins the settlement approval process with the Court. On January 20, 2022 the Court approved the settlement. Among other terms of the settlement, no further capital calls will be made in connection with the Company’s investment in OCV Fund I, L.P. On December 11, 2020, Danning Huang filed a lawsuit in the District of Delaware (20-cv-01687-LPS) asserting derivative claims against directors of the Company and other third parties. The lawsuit alleges violations of Section 14(a), Section 10(b), Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934, as well as breach of fiduciary duty, unjust enrichment and abuse of control. On March 24, 2021, Fritz Ringling filed a lawsuit in the District of Delaware (21-cv-00421-UNA) asserting substantially similar derivative claims, and on April 8, 2021, the district court consolidated the two actions under the caption In re J2 Global Stockholder Derivative Litigation. No.: 20-cv-01687-LPS. As part of the settlement of the Chancery Court Derivative Action described above, the Company and its directors and officers intend to defend against the remaining claims. The Company does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could have a material effect on the Company’s consolidated financial position, results of operations, or cash flows in a particular period. The Company has not accrued for any material loss contingencies relating to these legal proceedings because materially unfavorable outcomes are not considered probable by management. It is the Company’s policy to expense as incurred legal fees related to various litigations. Non-Income Related Taxes The Company does not collect and remit sales and use, telecommunication, or similar taxes and fees in certain jurisdictions where the Company believes such taxes are not applicable or legally required. Several states and other taxing jurisdictions have presented or threatened the Company with assessments, alleging that the Company is required to collect and remit such taxes there. The Company is currently under audit or is subject to audit for indirect taxes in various states, municipalities and foreign jurisdictions. The Company has a $24.3 million reserve established for these matters. It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a material impact to our financial results. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax 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. The Company’s effective tax rate was 45.9% and (44.2)% for the three months ended September 30, 2022 and 2021, respectively and 83.9% and 142.3% for the nine months ended September 30, 2022 and 2021, respectively. The Company’s effective tax rates for the three and nine months ended September 30, 2022 have been disproportionately impacted due to the size of the discrete book loss related to the Disposed Consensus Shares and Retained Consensus Shares. The net loss recorded for book purposes for the Disposed Consensus Shares, excluding transaction costs resulted in no tax benefit because the loss was not subject to tax since the Company disposed of the investment in a tax-free manner based on guidance and requirements set out by the Internal Revenue Service, within the one-year anniversary of the Separation. During the three months ended September 30, 2022, the Company recognized a tax charge of $11.3 million related to its Retained Consensus Shares due to recording a deferred tax liability as of September 30, 2022 as the Company did not dispose of the Retained Consensus Shares within the one-year anniversary of the Separation. This increase to tax expense was partially offset by a tax benefit of $6.7 million for recording a deferred tax asset on the impairment of goodwill recorded during the three months ended September 30, 2022. During the three months and nine months ended September 30, 2021, the Company recognized a tax benefit primarily due to the recognition of a tax benefit from the disposition and impairment of the B2B Back-up business, a reduction in the net reserve for uncertain tax positions and for the release of a valuation allowance on deferred tax assets related to the impairment of certain U.S. investments. During the three and nine months ended September 30, 2021, in connection with the redemption of the 3.25% Convertible Notes, the Company recorded a reduction in its deferred tax liabilities and an increase in additional paid-in capital of approximately $44.2 million. As the redemption of the 3.25% Convertible Notes were settled in cash and equity for an amount in excess of the Company’s tax basis in the 3.25% Convertible Notes, the deferred tax liability was reversed with an adjustment to additional-paid-in capital. Prior to the redemption, the Company had a deferred tax liability on the 3.25% Convertible Notes for cumulative book-tax temporary differences related to interest expense that resulted in the tax basis exceeding the financial statement carrying amount of the 3.25% Convertible Notes. Income (loss) from continuing operations before income taxes included a loss from domestic operations of approximately $0.3 million and $(63.1) million for the nine months ended September 30, 2022 and 2021, respectively, and income from foreign operations of $39.3 million and $49.1 million for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022 and December 31, 2021, the Company had $45.4 million and $42.5 million, respectively, in liabilities for uncertain income tax positions from continuing operations. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s Condensed Consolidated Statement of Operations. Certain taxes are prepaid during the year and, where appropriate, included within ‘Prepaid expenses and other current assets’ on the Condensed Consolidated Balance Sheet. The Company’s prepaid taxes were zero and $0.8 million at September 30, 2022 and December 31, 2021, respectively. Income Tax Audits : The Company is in various stages of audit by the U.S. Internal Revenue Service (“IRS”) for its 2012 through 2016 tax years. On February 24, 2021, the Company received a Notice of Deficiency for tax years 2012 through 2014 which disallowed certain deductions for domestic production. The Company disagrees with the Notice and filed a petition with the United States Tax Court on May 24, 2021. As of September 30, 2022, the audits are ongoing. The Company is under audit by the California Franchise Tax Board (“FTB”) for its tax years 2012, 2013, 2015, and 2016. The FTB, however, has agreed to suspend its audit pending the outcome of the IRS audit for such tax years. As of September 30, 2022, the audits are ongoing. In June 2019, the New York State Department of Taxation and Finance (“NYS”) notified the Company that it will commence an audit for tax year 2015. In April 2020, the NYS notified the Company that it will also commence an audit for tax years 2016 and 2017. As of September 30, 2022, the audits are ongoing. The Company conducts business on a global basis and as a result, one or more of its subsidiaries files income tax returns in the U.S. federal and in multiple state, local, and foreign tax jurisdictions. The Company’s U.S. federal income tax returns for years 2012 through 2016 are under various stages of audit by the IRS, as noted above. The Company is also under audit for various U.S. state and local tax purposes as noted above for its significant jurisdictions. With limited exception, the Company’s significant foreign tax jurisdictions are no longer subject to an income tax audit by the various tax authorities for tax years prior to 2014. It is reasonably possible that these audits may conclude in the next twelve 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. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to ten million shares of our common stock through August 6, 2025 (the “2020 Program”). The Company entered into certain Rule 10b5-1 trading plans during the years ended December 31, 2021 and 2020 to execute repurchases under the 2020 Program. During the three months ended September 30, 2022, the Company repurchased zero shares under the 2020 Program. During the nine months ended September 30, 2022, the Company repurchased 736,536 shares at an aggregate cost of approximately $71.3 million (including an immaterial amount of commission fees) under the 2020 Program. These shares were subsequently retired. Cumulatively as of September 30, 2022, 3,672,846 shares were repurchased at an aggregate cost of $296.9 million (including an immaterial amount of commission fees) under the 2020 Program. These shares were subsequently retired. As a result of the repurchases, the number of shares available for purchase as of September 30, 2022 is 6,327,154 shares of the Company’s common stock. Periodically, participants in the Company’s stock plans surrender to the Company shares of stock to pay the exercise price or to satisfy tax withholding obligations arising upon the exercise of stock options or the vesting of restricted stock. During the three months ended September 30, 2022 and 2021, the Company purchased and retired 2,601 and 49,641 shares at an aggregate cost of approximately $0.2 million and $6.9 million , respectively, from plan participants for this purpose. During the nine months ended September 30, 2022 and 2021, the Company purchased and retired 52,837 and 245,083 shares at an aggregate cost of approximately $5.2 million and $29.9 million , respectively, from plan participants for this purpose. In connection with the Separation, the Company called its 3.25% Convertible Notes for redemption and during the three and nine months ended September 30, 2021, the Company issued 3,031,817 and 3,050,850 shares of the Company’s common stock, respectively, in connection with that redemption (see Note 8 - Debt ). |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Based Compensation | Stock Based Compensation The Company’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 the Company’s 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 the Company’s common stock on the date of grant for incentive stock options and not less than 85% of the fair market value of the Company’s common stock on the date of grant for non-statutory stock options. As of September 30, 2022, zero shares underlying options and zero shares of restricted stock units were outstanding under the 2007 Plan. The 2007 Plan terminated on February 14, 2017. 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. 4,200,000 shares of the Company’s common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of the Company’s common stock subject to the option on the date the option is granted. As of September 30, 2022, 435,135 shares underlying options and 526,656 shares of restricted stock units were outstanding under the 2015 Plan. Restricted Stock The 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. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, four four The Company has awarded certain key employees market-based restricted stock awards pursuant to the 2015 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets for 20-days within a 30-day lookback (trading days). Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the nine months ended September 30, 2022 and 2021, the Company awarded 100,193 and 73,094 market-based restricted stock awards, respectively. The per share weighted average grant-date fair values of the market-based restricted stock awards granted during the nine months ended September 30, 2022 and 2021 were $87.11 and $94.40, respectively. The weighted-average fair values of market-based restricted stock awards granted have been estimated utilizing the following assumptions: September 30, 2022 September 30, 2021 Underlying stock price at valuation date $ 99.32 $ 113.27 Expected volatility 36.7 % 30.3 % Risk-free interest rate 1.8 % 1.3 % Restricted stock award activity for the nine months ended September 30, 2022 is set forth below: Shares Weighted-Average Nonvested at January 1, 2022 383,963 $ 62.65 Granted — — Vested (65,831) $ 80.89 Canceled (1,605) $ 93.75 Nonvested at September 30, 2022 316,527 $ 60.11 Restricted stock unit activity for the nine months ended September 30, 2022 is set forth below: Number of Weighted-Average Aggregate Outstanding at January 1, 2022 360,743 Granted 253,175 Vested (74,604) Canceled (12,658) Outstanding at September 30, 2022 526,656 2.6 $ 36,065,403 Vested and expected to vest at September 30, 2022 385,498 2.2 $ 26,398,925 As of September 30, 2022 and December 31, 2021, the Company had unrecognized share-based compensation cost of approximately $48.2 million and $44.3 million, respectively, associated with these restricted stock awards and restricted stock units. This cost is expected to be recognized over a weighted-average period of 3.0 for restricted stock awards and 3.7 for restricted stock units. Employee Stock Purchase Plan The Purchase Plan provides for the issuance of a maximum of two million shares of the Company’s common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of the Company’s common stock at certain plan-defined dates. The price of the Company’s common stock purchased under the Purchase Plan for the offering periods is equal to 85% of the lesser of the fair market value of a share of common stock of the Company on the beginning or the end of the offering period. The Company determined that a plan provision exists which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the ESPP. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 11.15% and 11.15% as of September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, 76,741 and 58,145 shares were purchased under the Purchase Plan, respectively. Cash received upon the issuance of the Company’s common stock under the Purchase Plan was $5.2 million and $4.2 million for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, 1,218,950 shares were available under the Purchase Plan for future issuance. The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions: September 30, 2022 September 30, 2021 Risk-free interest rate 1.54 % 0.06 % Expected term (in years) 0.5 0.5 Dividend yield 0.00 % 0.00 % Expected volatility 41.6 % 35.62 % Weighted average volatility 41.6 % 35.62 % |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data): Three Months Ended September 30, 2022 2021 Basic Diluted Basic Diluted Numerator for basic and diluted net income per common share: Net income from continuing operations $ 18,185 $ 18,185 $ 6,769 $ 6,769 Net income available to participating securities (1) (4) (4) (4) (4) 1.75% Convertible Notes interest expense (after-tax) (2) — — — — Net income available to the Company’s common shareholders from continuing operations $ 18,181 $ 18,181 $ 6,765 $ 6,765 Denominator: Weighted-average outstanding shares of common stock 46,871,897 46,871,897 46,738,073 46,738,073 Dilutive effect of: Equity incentive plans — — — 332,532 Convertible debt (2) — — — 1,511,980 Common stock and common stock equivalents 46,871,897 46,871,897 46,738,073 48,582,585 Net income per share from continuing operations: $ 0.39 $ 0.39 $ 0.14 $ 0.14 Nine Months Ended September 30, 2022 2021 Basic Diluted Basic Diluted Numerator for basic and diluted net income per common share: Net (loss) income from continuing operations $ (3,714) $ (3,714) $ 22,504 $ 22,504 Net income available to participating securities (1) — — (24) (24) 1.75% Convertible Notes interest expense (after-tax) (2) — — — — Net (loss) income available to the Company’s common shareholders from continuing operations $ (3,714) $ (3,714) $ 22,480 $ 22,480 Denominator: Weighted-average outstanding shares of common stock 46,967,671 46,967,671 45,258,819 45,258,819 Dilutive effect of: Equity incentive plans — — — 272,178 Convertible debt (2) — — — 2,034,065 Common stock and common stock equivalents 46,967,671 46,967,671 45,258,819 47,565,062 Net (loss) income per share from continuing operations: $ (0.08) $ (0.08) $ 0.50 $ 0.47 (1) Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid). (2) Under the modified retrospective method of adoption of ASU 2020-06, the dilutive impact of convertible debt was calculated using the if-converted method for the three and nine months ended September 30, 2022. The dilutive impact of convertible debt was calculated using the treasury stock method for the three and nine months ended September 30, 2021 (see Note 8 - Debt ). For the three months ended September 30, 2022 and 2021, there were 1,278,330 and zero, respectively, stock options and restricted stock excluded from the calculation as they were anti-dilutive. For the nine months ended September 30, 2022 and 2021, there were 1,278,330 and zero, respectively, stock options and restricted stock excluded from the calculation as they were anti-dilutive. For the three months ended September 30, 2022 and 2021, there were 5,158,071 and zero shares, respectively, related to convertible debt excluded from the calculation as they were anti-dilutive. For the nine months ended |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”). The Company aggregates its operating segments into two reportable segments: Digital Media and Cybersecurity and Martech. The accounting policies of the businesses are the same as those described in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2022. The Company evaluates performance based on revenue, gross margin and profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses. Information on reportable segments and reconciliation to income from operations is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue by reportable segment: Digital Media $ 263,896 $ 262,429 $ 757,423 $ 743,280 Cybersecurity and Martech 78,192 93,071 237,596 265,580 Elimination of inter-segment revenues (215) (356) (722) (766) Total segment revenues 341,873 355,144 994,297 1,008,094 Corporate (1) — — — — Total revenues $ 341,873 $ 355,144 $ 994,297 $ 1,008,094 Gross profit by reportable segment: Digital Media $ 232,887 $ 238,650 $ 676,040 $ 673,409 Cybersecurity and Martech 56,595 66,884 174,251 192,638 Elimination of inter-segment gross profit (212) (88) (701) (214) Total segment gross profit 289,270 305,446 849,590 865,833 Corporate (1) — — — (74) Total gross profit 289,270 305,446 849,590 865,759 Operating expenses by reportable segment (2) : Digital Media 205,570 188,950 571,980 548,960 Cybersecurity and Martech 42,765 56,208 135,516 191,282 Elimination of inter-segment operating expenses (212) (88) (701) (214) Total segment operating expenses 248,123 245,070 706,795 740,028 Corporate (1) 12,113 15,366 37,312 43,785 Total operating expenses 260,236 260,436 744,107 783,813 Operating income by reportable segment: Digital Media 27,317 49,700 104,060 124,449 Cybersecurity and Martech 13,830 10,676 38,735 1,356 Total segment operating income 41,147 60,376 142,795 125,805 Corporate (1) (12,113) (15,366) (37,312) (43,859) Income from operations $ 29,034 $ 45,010 $ 105,483 $ 81,946 (1) Corporate includes costs associated with general and administrative and other expenses that are managed on a global basis and that are not directly attributable to any particular segment. (2) Operating expenses for each segment include other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expense, depreciation and amortization and other administrative expenses. For the nine months ended September 30, 2021, goodwill impairment related to our B2B Backup business is also included within operating expenses for Cybersecurity and Martech. For the three and nine months ended September 30, 2022, the Company had an impairment to goodwill within operating expenses for Digital Media. The CODM does not use Balance Sheet and Cash Flow information in connection with operating and investment decisions other than as presented for Digital Media and Cybersecurity and Martech. Accordingly, the following segment information is presented for Digital Media and Cybersecurity and Martech. September 30, 2022 December 31, 2021 Assets: Digital Media $ 2,014,843 $ 2,043,204 Cybersecurity and Martech 970,482 1,088,741 Total assets from reportable segments 2,985,325 3,131,945 Corporate 447,743 638,335 Total assets $ 3,433,068 $ 3,770,280 Nine Months Ended September 30, 2022 2021 Capital expenditures Digital Media $ 69,451 $ 51,995 Cybersecurity and Martech 11,312 20,248 Total from reportable segments 80,763 72,243 Corporate 4 — Capital expenditures of discontinued operations — 15,252 Total capital expenditures $ 80,767 $ 87,495 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Depreciation and amortization: Digital Media $ 44,631 $ 50,056 $ 138,297 $ 147,482 Cybersecurity and Martech 11,445 12,742 36,566 39,803 Total from reportable segments 56,076 62,798 174,863 187,285 Corporate (139) 79 17 217 Depreciation and amortization of discontinued operations — 3,340 — 8,941 Total depreciation and amortization $ 55,937 $ 66,217 $ 174,880 $ 196,443 The Company maintains operations in the U.S., Canada, Ireland, the United Kingdom, India and other countries. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on jurisdictions where revenues are reported (in thousands). Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenues: United States $ 291,164 $ 297,123 $ 841,396 $ 837,656 Canada 8,629 8,284 24,780 24,596 Ireland 8,075 8,603 24,619 27,657 All other countries 34,005 41,134 103,502 118,185 Total $ 341,873 $ 355,144 $ 994,297 $ 1,008,094 September 30, 2022 December 31, 2021 Long-lived assets: United States $ 644,327 $ 726,128 All other countries 69,563 63,423 Total $ 713,890 $ 789,551 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Non-cash investing and financing activities were as follows (in thousands): Nine Months Ended September 30, 2022 2021 (1) Non-cash investing activity: Property and equipment, accrued but unpaid $ 184 $ 219 Right-of-use assets acquired in exchange for operating lease obligations $ 4,130 $ 9,274 Disposition of Investment in Consensus (2) $ 112,286 $ — Non-cash financing activity: Debt principal settled in exchange for Investment in Consensus (2) $ 112,286 $ — (1) Combines continuing and discontinued operations. (2) The Company disposed $160.1 million of its Investment in Consensus in exchange for $112.3 million of debt and recorded $47.8 million of loss on investment, net. Supplemental data (in thousands): Nine Months Ended September 30, 2022 2021 Interest paid $ 20,718 $ 29,467 Income taxes paid, net of refunds $ 31,632 $ 49,859 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax, for the three months ended September 30, 2022 (in thousands): Unrealized Gains (Losses) on Investments Foreign Currency Translation Total Balance as of July 1, 2022 $ 169 $ (83,865) $ (83,696) Other comprehensive loss (169) (24,753) (24,922) Balance as of September 30, 2022 $ — $ (108,618) $ (108,618) The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax, for the nine months ended September 30, 2022 (in thousands): Unrealized Gains (Losses) on Investments Foreign Currency Translation Total Balance as of January 1, 2022 $ 169 $ (57,391) $ (57,222) Other comprehensive loss (169) (51,227) (51,396) Balance as of September 30, 2022 $ — $ (108,618) $ (108,618) There were no reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2022. During the three and nine months ended September 30, 2022, accumulated other comprehensive loss and other comprehensive loss were adjusted by approximately zero and $4.1 million, respectively, related to the subsequent accounting for the Separation. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Consensus In preparation for and in executing the Separation, the Company incurred transaction-related costs, some of which were or the Company expects to be, reimbursed by Consensus. These transaction costs primarily related to professional fees associated with preparation of regulatory filings and transaction execution and separation activities within finance, tax and legal functions. In connection with the Separation, Ziff Davis and Consensus entered into several agreements that govern the relationship of the parties following the Separation, including a separation and distribution agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property license agreement, and a stockholder and registration rights agreement. The transition services agreement governs services including certain information technology services, finance and accounting services and human resource and employee benefit services. The agreed-upon charges for such services are generally intended to allow the providing company to recover all costs and expenses of providing such services, and nearly all such services were terminated without extension twelve months after the Separation. Amounts due from Consensus as of September 30, 2022 and December 31, 2021 were approximately $1.2 million and $9.3 million, respectively, related to reimbursement of certain other costs pursuant to the transition services agreement, certain transaction related costs and other costs, and are included in ‘Accounts receivable’ within the Condensed Consolidated Balance Sheets. During the three and nine months ended September 30, 2022, the Company recorded an offset to expense of approximately zero and $1.2 million, respectively, from Consensus related to certain items above within ‘General and administrative expenses’ within the Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2022, Consensus paid the Company approximately $7.2 million and $18.7 million, respectively, related to reimbursement of items described above. Further, the Company assigned its lease of office space in Los Angeles, California to Consensus. As of September 30, 2022, Ziff Davis remained the lessee under this lease and its obligations remained in place through October 7, 2022, after which time Consensus would take over the lease in full. During the three and nine months ended September 30, 2022, the Company recorded an offset to lease expense of approximately $0.5 million and $1.5 million, respectively, related to this lease, however, Consensus paid the landlord directly (other than an immaterial amount of sublease payments from Ziff Davis to Consensus). OCV On September 25, 2017, the Company entered into a commitment to invest in the Fund. The manager, OCV Management, LLC, and general partner of the Fund are entities with respect to which Richard S. Ressler, former Chairman of the Board, is indirectly the majority equity holder. Mr. Ressler’s tenure with the Board ended as of May 10, 2022. During the three and nine months ended September 30, 2022 and 2021, the Company recognized expense for management fees of zero and $0.8 million, net of tax benefit, respectively, and $1.5 million and $2.3 million, net of tax benefit, respectively. During the nine months ended September 30, 2021, the Company received capital call notices from the management of OCV Management, LLC for $21.2 million, inclusive of certain management fees. Approximately $21.2 million was paid for capital call notices during the nine months ended September 30, 2021. In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the Fund’s general partner will be entitled to a carried interest equal to 20%. The Fund has a six year investment period, subject to certain exceptions. The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy. In connection with the settlement of certain litigation generally related to the Company’s investment in the Fund (see Note 9 - Commitments and Contingencies ), among other terms, no further capital calls were made during the nine months ended September 30, 2022 or will be made in the future in connection with the Company’s investment in the Fund, nor will any future management fees be paid by the Company to the manager. |
Basis of Presentation and Ove_2
Basis of Presentation and Overview (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Discontinued Operations | Discontinued Operations On October 7, 2021, the Company completed the separation of its cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“Consensus”). The Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution. The Company’s stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock. Ziff Davis, Inc., formerly J2 Global, Inc., retained a 19.9% interest in Consensus following the Separation (the “Investment in Consensus”). The accounting requirements for reporting the Company’s cloud fax business as a discontinued operation were met when the Separation was completed. Accordingly, the Condensed Consolidated Financial Statements reflect the results of the cloud fax business as a discontinued operation for all periods presented. Ziff Davis did not retain a controlling interest in Consensus. On June 9, 2022, the Company entered into an agreement with certain selling shareholders of Consensus who executed an underwritten public offering pursuant to a registration statement filed by Consensus with the SEC for 2,000,000 shares of its common stock (including a 30-day option for the underwriters to purchase from the selling shareholders an additional 300,000 shares at the public offering price less the underwriting discount). On June 10, 2022, the Company entered into a Fifth Amendment to its existing Credit Agreement, providing for the issuance of a senior secured term loan under the Credit Agreement (the “Term Loan Facility”), in an aggregate principal amount of approximately $90.0 million. During June 2022, the Company subsequently completed a non-cash exchange of the 2,300,000 shares of its common stock of Consensus with the selling shareholders to settle the Company’s obligations of $90.0 million outstanding aggregate principal amount of the Term Loan Facility plus related interest and the corresponding underwriting fees. On September 14, 2022, the Company entered into an agreement with certain selling shareholders of Consensus who executed an underwritten public offering pursuant to a registration statement filed by Consensus with the SEC for 500,000 shares of its common stock. On September 15, 2022, the Company entered into a Sixth Amendment to its existing Credit Agreement, providing for the issuance of a senior secured term loan under the Credit Agreement (the “Term Loan Two Facility”, together with the Term Loan Facility, collectively, “Term Loan Facilities”), in an aggregate principal amount of approximately $22.3 million. During September 2022, the Company subsequently completed a non-cash exchange of the 500,000 shares of its common stock of Consensus with the selling shareholders to settle the Company’s obligations of $22.3 million outstanding aggregate principal amount of the Term Loan Two Facility plus related interest and the corresponding underwriting fees. Refer to Note 8 - Debt for further discussion. |
Allowances for Credit Losses | Allowances for Credit LossesThe Company maintains an allowance for credit losses on accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expenses in the Condensed Consolidated Statements of Operations. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when it identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status. It also considers customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. On an ongoing basis, management evaluates the adequacy of these reserves |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Refer to Note 2 - Revenues for additional details. Principal vs. Agent The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If 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 under Topic 606 for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer, (ii) whether the Company controls the specified goods or services prior to transferring control to the customer and (iii) whether the Company has discretion on pricing. Sales Taxes The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer. Digital Media Digital Media revenues are earned primarily from the delivery of advertising services and from subscriptions to services and information. Revenue is earned from the delivery of advertising services on websites that are owned and operated by us and on those websites that are part of Digital Media’s advertising network. Depending on the individual contracts with the customer, revenue for these services is recognized over the contract period when any of the following performance obligations are satisfied: (i) when an advertisement is placed for viewing, (ii) when a qualified sales lead is delivered, (iii) when a visitor “clicks through” on an advertisement or (iv) when commissions are earned upon the sale of an advertised product. Revenue from subscriptions is earned through the granting of access to, or delivery of, data products or services to customers. Subscriptions cover video games and related content, health information, data and other copyrighted material. Revenues under such agreements are recognized over the contract term for use of the service. Revenues are also earned from listing fees, subscriptions to online publications, and from other sources. Subscription revenues are recognized over time. We also generate Digital Media subscription revenues through the license of certain assets to clients. Assets are licensed for clients’ use in their own promotional materials or otherwise and may include logos, editorial reviews, or other copyrighted material. Revenues under such license agreements are recognized over the contract term for use of the asset. In instances when technology assets are licensed to our clients, revenues from the license of these assets are recognized over the term of the access period. The Digital Media business also generates revenue from other sources which include marketing and production services. Such other revenues are generally recognized over the period in which the products or services are delivered. We also generate Digital Media revenues from transactions involving the sale of perpetual software licenses, related software support and maintenance, hardware used in conjunction with its software, and other related services. Revenue is recognized for these software transactions with multiple performance obligations after (i) the contract has been approved and we are committed to perform the respective obligations and (ii) we can identify and quantify each obligation and its respective selling price. Once the respective performance obligations have been identified and quantified, revenue will be recognized when the obligations are met, either over time or at a point in time depending on the nature of the obligation. Revenues from software license performance obligations are generally recognized upfront at the point in time that the software is made available to the customer to download and use. Revenues for related software support and maintenance performance obligations are related to technical support provided to customers as needed and unspecified software product upgrades, maintenance releases and patches during the term of the support period when they are available. We are obligated to make the support services available continuously throughout the contract period. Therefore, revenues for support contracts are generally recognized ratably over the contractual period the support services are provided. Hardware product and related software performance obligations, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a bundled performance obligation. The revenues for this bundled performance obligation are generally recognized at the point in time that the hardware and software products are delivered and ownership is transferred to the customer. Other service revenues are generally recognized over time as the services are performed. The Company records revenue on a gross basis with respect to revenue generated (i) by the Company serving online display and video advertising across its owned and operated web properties, on third-party sites or on unaffiliated advertising networks; (ii) through the Company’s lead-generation business; and (iii) through the Company’s subscriptions. The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party sites. Cybersecurity and Martech The Company’s Cybersecurity and Martech revenues substantially consist of subscription revenues which include subscription, usage-based and licensing fees, a significant portion of which are paid in advance. The Company defers the portions of monthly, quarterly, semi-annual and annual fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned. Along with its numerous proprietary Cybersecurity and Martech solutions, the Company also generates subscription revenues by reselling various third-party solutions, primarily through its email security line of business. These third-party solutions, along with the Company’s proprietary products, allow it to offer customers a variety of solutions to better meet the customer’s needs. The Company records revenue on a gross basis with respect to reseller revenue because the Company has control of the specified good or service prior to transferring control to the customer. Performance Obligations We are often a party to multiple concurrent contracts with the same customer, or a party related to that customer. These situations require judgment to determine if those arrangements should be accounted for as a single contract. Consideration of both the form and the substance of the arrangement is required. The Company’s contracts with customers may include multiple performance obligations, including complex contracts when advertising and licensing services are sold together. We determine the transaction price based on the amount to which we expect to be entitled in exchange for services provided. We include any fixed consideration within our contracts as part of the total transaction price. Our contracts occasionally contain some component of variable consideration, which is often immaterial and estimated. We do not include 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. The transaction price is allocated to each performance obligation based on its relative standalone selling price, which is determined at contract inception. In these instances, the Company determines its standalone selling prices based on the prices at which the Company separately sells each service. The Company satisfies its performance obligations within the Digital Media business upon delivery of services to its customers. In addition, the Company provides content to its advertising partners which the Company sells to its partners’ customer base and receives a revenue share based on the terms of the agreement. The Company satisfies its performance obligations within the Cybersecurity and Martech business upon delivery of services to its customers. Payment terms vary by type and location of our customers and the services offered. The time between invoicing and when payment is due is not significant. Due to the nature of the services provided, there are no obligations for returns. Significant Judgments Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is also required to determine the standalone selling price for each distinct performance obligation. Performance Obligations Satisfied Over Time Our Digital Media business consists primarily of performance obligations that are satisfied over time. This was determined based on a review of the contracts and the nature of the services offered, where the customer simultaneously receives and consumes the benefit of the services provided. Satisfaction of these performance obligations is evidenced in the following ways: Advertising • Website reporting by the Company, the customer, or a third-party contains the delivery evidence needed to satisfy the performance obligations within the advertising contract • Successfully delivered leads are evidenced by either delivery reports from the Company’s internal lead management systems or through e-mail communication and/or other evidence of delivery showing acceptance of leads by the customer • Commission is evidenced by direct site reporting from the affiliate or via direct confirmation from the customer Subscription • Evidence of delivery is contained in the Company’s systems or from correspondence with the customer which tracks when a customer accepts delivery of any assets, digital keys or download links Revenue is recognized based on delivery of services over the contract period for advertising and on a straight-line basis over the contract period for subscriptions. We believe that the methods described are a faithful depiction of the transfer of goods and services. Our Cybersecurity and Martech business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following materially distinct performance obligations are satisfied: • Voice, email marketing and search engine optimization as services are delivered • Consumer privacy services and data backup capabilities are provided • Security solutions, including email and endpoint are provided • Faxing capabilities are provided (included in discontinued operations through October 7, 2021) The Company has concluded the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period, or as usage occurs, and believes that the method used is a faithful depiction of the transfer of goods and services. Performance Obligations Satisfied at a Point in Time The Company’s Digital Media business has technology subscriptions that have standalone functionality. As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time. This is evidenced once a digital key is delivered to the customer. Once the key is delivered to the customer, the customer has full control of the technology and the Company has no further performance obligations. The Company has concluded that revenue is recognized once the digital key is delivered. The Company believes that this method is a faithful depiction of the transfer of goods and services. Transaction Price Allocation to Future Performance Obligations As of September 30, 2022, the aggregate amount of transaction price that is allocated to our performance obligations was approximately $24.0 million and is expected to be recognized as follows: 20% by December 31, 2022, 78% by December 31, 2023 and the rest thereafter. The amount disclosed does not include revenues related to performance obligations that are part of a contract with original expected duration of 12 months or less or portions of the contract that remain subject to cancellations. |
Investments | Investments We account for our investments in debt securities in accordance with ASC Topic 320, Investments - Debt Securities (“ASC 320”) . Our debt investments are typically comprised of corporate debt securities, which are classified as available-for-sale. Available-for-sale securities are carried at fair value with unrealized gains and losses included in other comprehensive income. All debt securities are accounted for on a specific identification basis. The Company’s available-for-sale debt securities are carried at an estimated fair value with any unrealized gains or losses, net of taxes, included in accumulated other comprehensive loss on our Condensed Consolidated Balance Sheets. Available-for-sale debt securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses. Expected credit losses on available-for-sale debt securities are recognized in loss on investments, net on our Condensed Consolidated Statements of Operations, and any remaining unrealized losses, net of taxes, are included in accumulated comprehensive loss on our Condensed Consolidated Balance Sheets. We account for investments in equity securities in accordance with ASC Topic 321, Investments - Equity Securities (“ASC 321”) , which requires the accounting for equity investments, other than those accounted for under the equity method of accounting, generally be measured at fair value for equity securities with readily determinable fair values. Equity securities without a readily determinable fair value, which are not accounted for under the equity method of accounting, are measured at their cost, less impairment, if any, and adjusted for observable price changes arising from orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported within earnings on the Condensed Consolidated Statements of Operations. We assess whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions. Refer to Note 4 - Investments for additional information. The Retained Consensus Shares are equity securities accounted for at fair value under the fair value option, and the related fair value gains and losses are recognized in earnings. As the initial carrying value of the Retained Consensus Shares was negative immediately following the Separation, the Company elected the fair value option under ASC 825-10-25 to support the initial recognition of the Retained Consensus Shares at fair value and the negative book value was recorded as a gain at the date of Separation. The fair value of Consensus common stock is readily available as Consensus is a publicly traded company. |
Variable Interest Entities (“VIE”) | Variable Interest Entities (“VIEs”) A VIE requires consolidation by the entity’s primary beneficiary. The Company evaluates its investments in entities in which it is involved to determine if the entity is a VIE and if so, whether it holds a variable interest and is the primary beneficiary. The Company has determined that it holds a variable interest in its investment as a limited partner in the OCV Fund I, LP (“OCV Fund”, “OCV” or the “Fund”) and in Group Black, Inc. (“Group Black”). In determining whether the Company is deemed to be the primary beneficiary of the VIE, both of the following characteristics must be present: a) the Company has the power to direct the activities of the VIE that most significantly impacts the VIEs economic performance (the power criterion); and b) the Company has the obligation to absorb losses of the VIE, or the right to receive benefits of the VIE, that could potentially be significant to the VIE (the economic criterion). The Company has concluded that, as a limited partner, although the obligations to absorb losses or the right to benefit from the gains is not insignificant, the Company does not have “power” over OCV because it does not have the ability to direct the significant decisions which impact the economics of OCV. The Company believes that the OCV general partner, as a single decision maker, holds the ability to make the decisions about the activities that most significantly impact the OCV Fund’s economic performance. As a result, the Company has concluded that it will not consolidate OCV, as it is not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting (see Note 4 - Investments ). OCV qualifies as an investment company under ASC Topic 946, Financial Services, Investment Companies (“ASC 946”). Under ASC Topic 323, Investments - Equity Method and Joint Ventures, an investor that holds investments that qualify for specialized industry accounting for investment companies in accordance with ASC 946 should record its share of the earnings or losses, realized or unrealized, as reported by its equity method investees in the Condensed Consolidated Statements of Operations. The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline. Ziff Davis has variable interests in Group Black. Group Black is a limited partnership and is managed by its Board of Directors. As of September 30, 2022, the Company does not have voting rights in the investee and lacks the power and the ability to control or direct the significant economic operations of the investee. Ziff Davis is not a primary beneficiary and does not consolidate the entity under either the VIE model or the voting interest (“VOE”) model. Refer to Note 4 - Investments for additional detail. |
Impairment or Disposal of Long-Lived Assets | Impairment or Disposal of Long-Lived Assets The Company accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of ASC Topic. 360, Property, Plant, and Equipment (“ASC 360”), which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to the expected undiscounted future net cash flows generated by the asset. If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extent of the difference. The Company assesses the impairment of identifiable definite-lived intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors it considers important which could individually or in combination trigger an impairment include the following: • Significant underperformance relative to expected historical or projected future operating results; • Significant changes in the manner of our use of the acquired assets or the strategy for the Company’s overall business; • Significant negative industry or economic trends; • Significant decline in the Company’s stock price for a sustained period; and • The Company’s market capitalization relative to net book value. If the Company determined that the carrying value of definite-lived intangibles and long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, it would record an impairment equal to the excess of the carrying amount of the asset over its estimated fair value. The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of definite-lived assets may not be recoverable. During the nine months ended September 30, 2022, the Company did not have any events or circumstances indicating impairment of long-lived assets, other than the recording of an impairment of certain operating lease right-of-use assets in the amount of $0.4 million. During the nine months ended September 30, 2021, the Company recorded impairments of $9.4 million on its operating lease right of use assets primarily related to exiting certain lease space as the Company regularly evaluates its office space requirements in light of more of its workforce working from home as part of a permanent “remote” or “partial remote” work model. The impairment is presented in general and administrative expense on the Condensed Consolidated Statement of Operations. The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable and the transfer is expected to qualify for recognition as a sale within one year, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale. |
Business Combinations and Valuation of Goodwill and Intangible Assets | Business Combinations and Valuation of Goodwill and Intangible Assets The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired. Such estimates may be based on significant unobservable inputs and assumptions such as, but not limited to, future revenue growth rates, gross and operating margins, customer attrition rates, royalty rates, discount rates and terminal growth rate assumptions. The Company uses established valuation techniques and may engage reputable valuation specialists to assist with the valuations. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from one Goodwill and Intangible Assets |
Contingent Consideration | Contingent Consideration Certain of the Company’s acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future income thresholds or other metrics. The contingent earn-out arrangements are based upon the Company’s valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved. The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the Condensed Consolidated Balance Sheets. The Company considers several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former shareholders of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of the Company’s other key employees. The contingent earn-out payments are not affected by employment termination. The Company measures its contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 6 - Fair Value Measurements ). The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses a probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and 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 Condensed Consolidated Statements of Cash Flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities. The Company reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior amounts. Changes in the estimated fair value of its contingent earn-out liabilities and adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in general and administrative expenses on the Condensed Consolidated Statements of Operations. |
Income Taxes | Income Taxes The Company’s income is subject to taxation in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves for tax contingencies are established when the Company believes that certain positions might be challenged despite the Company’s belief that its tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. The valuation allowance is reviewed quarterly based upon the facts and circumstances known at the time. In assessing this valuation allowance, the Company reviews historical and future expected operating results and other factors, including its recent cumulative earnings experience, expectations of future taxable income by taxing jurisdiction and the carryforward periods available for tax reporting purposes, to determine whether it is more likely than not that deferred tax assets are realizable. ASC 740 provides guidance on the minimum threshold that an uncertain income tax benefit is required to meet before it can be recognized in the financial statements and applies to all income tax positions taken by a company. ASC 740 contains a two-step approach to recognizing and measuring uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain income tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company recognizes accrued interest and penalties related to uncertain income tax positions in income tax expense on its Condensed Consolidated Statements of Operations. |
Share-Based Compensation | Share-Based Compensation We account for share-based awards to employees and non-employees in accordance with the provisions of ASC Topic 718, Compensation - Stock Compensation (“ASC 718”), which requires |
Earnings Per Common Share ("EPS") | Earnings Per Common Share (“EPS”) On January 1, 2022, the Company adopted Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently issued applicable accounting pronouncements not yet adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This update provides for optional financial reporting alternatives to reduce cost and complexities associated with accounting for contracts, hedging relationships, and other transactions affected by reference rate reform. This update applies only to contracts, hedging relationships, and other transactions that reference London Interbank Offer Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The accommodations are available for all entities through December 31, 2022, with early adoption permitted. We are currently evaluating the effect the adoption of this update will have on our condensed consolidated Recently adopted accounting pronouncements In August 2020, the FASB issued ASU 2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) . The provisions of this update simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt - Debt with Conversion and Other Options , for convertible instruments. The convertible debt instruments will be accounted for as a single liability at the amortized cost if separation is no longer required unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change is expected to reduce reported noncash interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities. Similarly, the debt discount, that is equal to the carrying value of the embedded conversion feature upon issuance, will no longer be amortized into income as interest expense over the life of the instrument. Additionally, ASU No. 2020-06 requires the use of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards . On January 1, 2022, the Company adopted ASU 2020-06 |
Reclassifications | Reclassifications Certain prior year reported amounts have been reclassified to conform to the 2022 presentation. |
Fair Value Measurements | The Company complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value. § Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. § Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. § Level 3 – Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices. The fair value of long-term debt is determined using recent quoted market prices or dealer quotes for each of the Company’s instruments, which are Level 1 inputs. The fair value of the Company’s debt instruments was approximately $0.9 billion and $1.3 billion, as of September 30, 2022 and December 31, 2021, respectively (see Note 8 - Debt ). The Retained Consensus Shares are equity securities for which the Company elected the fair value option, and the fair value of the Retained Consensus Shares and subsequent fair value changes are included in our assets of and results from continuing operations, respectively. As of September 30, 2022 and December 31, 2021, the Company’s investment in Consensus common stock was remeasured at fair value based on Consensus’ closing stock price with a balance of $54.9 million and $229.2 million included on the Condensed Consolidated Balance Sheets, respectively. Unrealized gain (loss) of $4.2 million and $(14.2) million were recorded on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022, respectively. The fair value of the investment in Consensus is determined using quoted market prices, which is a Level 1 input. The fair value of our 4.625% Senior Notes (as defined in Note 8 - 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. The fair value of the Credit Facility (as defined in Note 8 - Debt ) approximated its carrying amount due to its variable interest rate, which approximated a market interest rate, and was considered a Level 2 input. The investment in corporate debt securities is measured at fair value on our Condensed Consolidated Balance Sheets. Unrealized gains and losses are reported in other comprehensive income until realized. Corporate debt securities do not have a readily determinable fair value because acquired securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. The investment in corporate debt securities is classified as available-for-sale and is initially measured at its transaction price. The fair value of the corporate debt securities is determined primarily based in significant estimates and assumptions, including Level 3 inputs. As of September 30, 2022, the fair value of our investment in corporate debt securities approximates its carrying value due to close proximity of the date of the investment to the reporting date. Refer to Note 4 - Investments for additional information. The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. The valuation approaches used to value Level 3 investments considers unobservable inputs in the market such as time to liquidity, volatility, dividend yield, and breakpoints. Significant increases or decreases in either of the inputs in isolation would result in a significantly lower or higher fair value measurement. |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Revenues from external customers classified by revenue source are as follows (in thousands). See Note 14 - Segment Information for additional information. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Digital Media Advertising $ 186,921 $ 198,794 $ 546,186 $ 574,465 Subscription 64,780 52,010 179,257 145,935 Other 12,195 11,625 31,980 22,880 Total Digital Media revenues $ 263,896 $ 262,429 $ 757,423 $ 743,280 Cybersecurity and Martech Subscription $ 78,192 $ 93,071 $ 237,596 $ 265,580 Total Cybersecurity and Martech revenues $ 78,192 $ 93,071 $ 237,596 $ 265,580 Elimination of inter-segment revenues (215) (356) (722) (766) Total Revenues $ 341,873 $ 355,144 $ 994,297 $ 1,008,094 Timing of revenue recognition Point in time $ 14,417 $ 13,607 $ 32,602 $ 30,669 Over time 327,456 341,537 961,695 977,425 Total $ 341,873 $ 355,144 $ 994,297 $ 1,008,094 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Allocation of Aggregate Purchase Price | The following table summarizes the preliminary allocation of the purchase consideration for all 2022 acquisitions as of September 30, 2022 (in thousands): Assets and Liabilities Valuation Accounts receivable $ 7,433 Prepaid expenses and other current assets 4,915 Property and equipment 369 Operating lease right-of-use assets, noncurrent 546 Trade names 12,838 Customer relationship 20,540 Goodwill 93,827 Other intangibles 18,165 Other long-term assets 11 Accounts payable and accrued expenses (4,656) Deferred revenue (21,332) Deferred tax liability (10,436) Other long-term liabilities (516) Total $ 121,704 The following table summarizes the allocation of the purchase consideration for all 2021 acquisitions as of September 30, 2021, including individually material acquisitions noted separately (in thousands): Assets and Liabilities Valuation Accounts receivable $ 4,577 Prepaid expenses and other current assets 2,585 Property and equipment 1,838 Operating lease right-of-use assets, noncurrent 5,888 Trade names 11,118 Customer relationship 13,396 Goodwill 84,019 Other intangibles 34,378 Other long-term assets 62 Deferred tax asset 231 Accounts payables and accrued expenses (2,891) Deferred revenue (7,806) Operating lease liabilities, current (7,191) Other current liabilities (14) Deferred tax liability (4,122) Other long-term liabilities (1,726) Total $ 134,342 The following table summarizes the allocation of the purchase consideration for the SEOmoz acquisition (in thousands): Assets and Liabilities Valuation Accounts receivable $ 3,278 Prepaid expenses and other current assets 2,512 Property and equipment 1,838 Operating lease right of use asset 5,888 Trade names 7,200 Customer relationships 5,000 Goodwill 41,192 Other intangibles 21,607 Other long-term assets 62 Accounts payables and accrued expenses (2,421) Other current liabilities (14) Deferred revenue (7,048) Operating lease liabilities, current (7,191) Deferred tax liability (4,122) Other long-term liabilities (785) Total $ 66,996 |
Pro Forma Financial Information | The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its 2022 acquisitions as if each acquisition had occurred on January 1, 2021 (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (unaudited) (unaudited) (unaudited) (unaudited) Revenues $ 342,173 $ 366,258 $ 1,010,600 $ 1,041,436 Net income (loss) from continuing operations $ 18,120 $ 4,925 $ (3,801) $ 23,369 Income (loss) per common share from continuing operations - Basic $ 0.39 $ 0.11 $ (0.08) $ 0.52 Income (loss) per common share from continuing operations - Diluted $ 0.39 $ 0.10 $ (0.08) $ 0.49 The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its acquisitions during the three months and nine months ended September 30, 2021 as if each acquisition had occurred on January 1, 2020 (in thousands, except per share amounts): Three Months Ended September 30, 2021 Nine months ended September 30, 2021 (unaudited) (unaudited) Revenues $ 374,202 $ 1,045,184 Net income from continuing operations $ 6,886 $ 25,490 Income per common share from continuing operations - Basic $ 0.15 $ 0.56 Income per common share from continuing operations - Diluted $ 0.14 $ 0.54 The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and SEOmoz as if the acquisition had occurred on January 1, 2020 (in thousands, except per share amounts): Three Months Ended September 30, 2021 Nine months ended September 30, 2021 (unaudited) (unaudited) Revenues $ 367,414 $ 1,028,545 Net income from continuing operations $ 6,610 $ 24,030 Income per common share from continuing operations - Basic $ 0.14 $ 0.53 Income per common share from continuing operations - Diluted $ 0.14 $ 0.51 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Debt Securities, Trading, and Equity Securities, FV-NI | Gains (losses) on equity securities recognized in ‘Unrealized gain (loss) on short-term investments held at the reporting date’ consisted of the following (in thousands): Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Net gains (losses) during the period $ 4,672 $ (61,937) Less: gains (losses) on securities sold during the period 471 (47,772) Unrealized gains (losses) recognized during the period on equity securities held at the reporting date $ 4,201 $ (14,165) |
Summary of Available-for-sale Investments | The table below summarizes the carrying value and the maximum exposure of Company’s investment in corporate debt securities as of September 30, 2022 (in thousands): September 30, 2022 Carrying value Maximum exposure Investment in corporate debt securities $ 15,000 $ 15,000 The following table summarizes the gross unrealized gains and losses and fair values for investments classified as available-for-sale, with the unrealized gains and losses reported as a component of other comprehensive income (in thousands): Amortized Gross Gross Fair September 30, 2022 Investment in corporate debt securities $ 15,000 $ — $ — $ 15,000 Total $ 15,000 $ — $ — $ 15,000 |
Available-for-Sale Securities Classified by Contractual Maturity Date | The following table summarizes the Company’s corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands): September 30, 2022 December 31, 2021 Due within 1 year $ — $ — Due within more than 1 year but less than 5 years 15,000 — Due within more than 5 years but less than 10 years — — Due 10 years or after — — Total $ 15,000 $ — |
Carrying Amount for Equity Method Investment | The following table discloses the carrying amount for the Company’s equity method investment (in thousands). These equity securities are included within ‘Long-term investments’ in the Condensed Consolidated Balance Sheets. September 30, 2022 December 31, 2021 Equity securities $ 109,228 $ 122,593 Maximum exposure to loss $ 109,228 $ 122,593 |
Discontinued Operations and D_2
Discontinued Operations and Dispositions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Assets Held for Sale | The key components of cash flows from discontinued operations were as follows (in thousands): Nine Months Ended September 30, 2021 Capital expenditures $ 15,252 Depreciation and amortization $ 8,941 Deferred taxes $ 5,306 The key components of income from discontinued operations were as follows (in thousands): Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Revenues $ 89,107 $ 263,386 Cost of revenues (14,605) (43,129) Sales and marketing (13,116) (40,032) Research, development and engineering (2,019) (5,635) General and administrative (8,237) (20,262) Interest expense and other (3,818) (4,017) Income before income taxes 47,312 150,311 Income tax expense (11,512) (36,606) Income from discontinued operations, net of income taxes $ 35,800 $ 113,705 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Values of Financial Instruments Measured On Recurring Basis | The following tables present the fair values of the Company’s financial assets or liabilities (in thousands): September 30, 2022 Level 1 Level 2 Level 3 Fair Value Carrying Value Assets: Cash equivalents: Money market and other funds $ 170,574 $ — $ — $ 170,574 $ 170,574 Investment in corporate debt securities — — 15,000 15,000 15,000 Investment in Consensus 54,897 — — 54,897 54,897 Total assets measured at fair value $ 225,471 $ — $ 15,000 $ 240,471 $ 240,471 Liabilities: Contingent consideration $ — $ — $ 1,106 $ 1,106 $ 1,106 Debt 891,852 — — 891,852 998,499 Total liabilities measured at fair value $ 891,852 $ — $ 1,106 $ 892,958 $ 999,605 December 31, 2021 Level 1 Level 2 Level 3 Fair Value Carrying Value Assets: Cash equivalents: Money market and other funds $ 144,255 $ — $ — $ 144,255 $ 144,255 Investment in Consensus 229,200 — — 229,200 229,200 Total assets measured at fair value $ 373,455 $ — $ — $ 373,455 $ 373,455 Liabilities: Contingent consideration $ — $ — $ 5,775 $ 5,775 $ 5,775 Debt 1,345,311 — — 1,345,311 1,090,627 Total liabilities measured at fair value $ 1,345,311 $ — $ 5,775 $ 1,351,086 $ 1,096,402 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents a reconciliation of the Company’s Level 3 financial assets related to our investment in corporate debt securities that are measured at fair value on a recurring basis (in thousands): Level 3 Affected line item in the Statement of Operations Balance as of January 1, 2022 $ — Investment in corporate debt securities 15,000 Not applicable Balance as of September 30, 2022 $ 15,000 |
Reconciliation of Level 3 Financial Liabilities Measured on Recurring Basis | The following table presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands): Level 3 Affected line item in the Statement of Operations Balance as of January 1, 2022 $ 5,775 Contingent consideration 555 Total fair value adjustments reported in earnings (2,305) General and administrative Contingent consideration payments (2,919) Not applicable Balance as of September 30, 2022 $ 1,106 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amounts of Goodwill | The changes in carrying amounts of goodwill for the nine months ended September 30, 2022 are as follows (in thousands): Digital Media Cybersecurity and Martech Consolidated Balance as of January 1, 2022 $ 996,659 $ 534,796 $ 1,531,455 Goodwill acquired (Note 3) 93,827 — 93,827 Goodwill impairment (27,369) — (27,369) Purchase accounting adjustments (Note 3) 4,943 (137) 4,806 Foreign exchange translation (5,952) (16,810) (22,762) Balance as of September 30, 2022 $ 1,062,108 $ 517,849 $ 1,579,957 |
Intangible Assets Subject to Amortization | As of September 30, 2022, intangible assets subject to amortization relate primarily to the following (in thousands): Weighted-Average Historical Accumulated Net Trade names 10.0 years $ 261,070 $ 119,026 $ 142,044 Customer relationships (1) 7.9 years 683,503 456,377 227,126 Other purchased intangibles 8.6 years 480,986 351,704 129,282 Total $ 1,425,559 $ 927,107 $ 498,452 (1) The Company amortizes customer relationship assets in a pattern that best reflects the pace at 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, 2021, intangible assets subject to amortization relate primarily to the following (in thousands): Weighted-Average Amortization Period Historical Accumulated Net Trade names 9.7 years $ 250,418 $ 102,657 $ 147,761 Customer relationships (1) 8.1 years 673,847 398,396 275,451 Other purchased intangibles 9.3 years 467,028 317,515 149,513 Total $ 1,391,293 $ 818,568 $ 572,725 (1) The Company amortizes customer relationship assets in a pattern that best reflects the pace at 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. |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Long-term Debt | The Company’s debt as of September 30, 2022 and December 31, 2021 consists of the following (in thousands): September 30, 2022 December 31, 2021 4.625% Senior Notes $ 460,038 $ 641,276 1.75% Convertible Notes 550,000 550,000 Total Notes 1,010,038 1,191,276 Less: Unamortized discount (2,837) (91,593) Deferred issuance costs (8,702) (9,056) Total debt 998,499 1,090,627 Less: current portion — (54,609) Total long-term debt, less current portion $ 998,499 $ 1,036,018 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Market-Based Restricted Stock Awards, Valuation Assumptions | The weighted-average fair values of market-based restricted stock awards granted have been estimated utilizing the following assumptions: September 30, 2022 September 30, 2021 Underlying stock price at valuation date $ 99.32 $ 113.27 Expected volatility 36.7 % 30.3 % Risk-free interest rate 1.8 % 1.3 % |
Restricted Stock and Restricted Stock Unit Award Activity | Restricted stock award activity for the nine months ended September 30, 2022 is set forth below: Shares Weighted-Average Nonvested at January 1, 2022 383,963 $ 62.65 Granted — — Vested (65,831) $ 80.89 Canceled (1,605) $ 93.75 Nonvested at September 30, 2022 316,527 $ 60.11 Restricted stock unit activity for the nine months ended September 30, 2022 is set forth below: Number of Weighted-Average Aggregate Outstanding at January 1, 2022 360,743 Granted 253,175 Vested (74,604) Canceled (12,658) Outstanding at September 30, 2022 526,656 2.6 $ 36,065,403 Vested and expected to vest at September 30, 2022 385,498 2.2 $ 26,398,925 |
Employee Stock Purchase Plan, Valuation Assumptions | The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions: September 30, 2022 September 30, 2021 Risk-free interest rate 1.54 % 0.06 % Expected term (in years) 0.5 0.5 Dividend yield 0.00 % 0.00 % Expected volatility 41.6 % 35.62 % Weighted average volatility 41.6 % 35.62 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Components of Basic and Diluted Earnings Per Share | The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data): Three Months Ended September 30, 2022 2021 Basic Diluted Basic Diluted Numerator for basic and diluted net income per common share: Net income from continuing operations $ 18,185 $ 18,185 $ 6,769 $ 6,769 Net income available to participating securities (1) (4) (4) (4) (4) 1.75% Convertible Notes interest expense (after-tax) (2) — — — — Net income available to the Company’s common shareholders from continuing operations $ 18,181 $ 18,181 $ 6,765 $ 6,765 Denominator: Weighted-average outstanding shares of common stock 46,871,897 46,871,897 46,738,073 46,738,073 Dilutive effect of: Equity incentive plans — — — 332,532 Convertible debt (2) — — — 1,511,980 Common stock and common stock equivalents 46,871,897 46,871,897 46,738,073 48,582,585 Net income per share from continuing operations: $ 0.39 $ 0.39 $ 0.14 $ 0.14 Nine Months Ended September 30, 2022 2021 Basic Diluted Basic Diluted Numerator for basic and diluted net income per common share: Net (loss) income from continuing operations $ (3,714) $ (3,714) $ 22,504 $ 22,504 Net income available to participating securities (1) — — (24) (24) 1.75% Convertible Notes interest expense (after-tax) (2) — — — — Net (loss) income available to the Company’s common shareholders from continuing operations $ (3,714) $ (3,714) $ 22,480 $ 22,480 Denominator: Weighted-average outstanding shares of common stock 46,967,671 46,967,671 45,258,819 45,258,819 Dilutive effect of: Equity incentive plans — — — 272,178 Convertible debt (2) — — — 2,034,065 Common stock and common stock equivalents 46,967,671 46,967,671 45,258,819 47,565,062 Net (loss) income per share from continuing operations: $ (0.08) $ (0.08) $ 0.50 $ 0.47 (1) Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid). (2) Under the modified retrospective method of adoption of ASU 2020-06, the dilutive impact of convertible debt was calculated using the if-converted method for the three and nine months ended September 30, 2022. The dilutive impact of convertible debt was calculated using the treasury stock method for the three and nine months ended September 30, 2021 (see Note 8 - Debt ). |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Reconciliation of Total Segment Operating Income to Consolidated Operating Income | Information on reportable segments and reconciliation to income from operations is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue by reportable segment: Digital Media $ 263,896 $ 262,429 $ 757,423 $ 743,280 Cybersecurity and Martech 78,192 93,071 237,596 265,580 Elimination of inter-segment revenues (215) (356) (722) (766) Total segment revenues 341,873 355,144 994,297 1,008,094 Corporate (1) — — — — Total revenues $ 341,873 $ 355,144 $ 994,297 $ 1,008,094 Gross profit by reportable segment: Digital Media $ 232,887 $ 238,650 $ 676,040 $ 673,409 Cybersecurity and Martech 56,595 66,884 174,251 192,638 Elimination of inter-segment gross profit (212) (88) (701) (214) Total segment gross profit 289,270 305,446 849,590 865,833 Corporate (1) — — — (74) Total gross profit 289,270 305,446 849,590 865,759 Operating expenses by reportable segment (2) : Digital Media 205,570 188,950 571,980 548,960 Cybersecurity and Martech 42,765 56,208 135,516 191,282 Elimination of inter-segment operating expenses (212) (88) (701) (214) Total segment operating expenses 248,123 245,070 706,795 740,028 Corporate (1) 12,113 15,366 37,312 43,785 Total operating expenses 260,236 260,436 744,107 783,813 Operating income by reportable segment: Digital Media 27,317 49,700 104,060 124,449 Cybersecurity and Martech 13,830 10,676 38,735 1,356 Total segment operating income 41,147 60,376 142,795 125,805 Corporate (1) (12,113) (15,366) (37,312) (43,859) Income from operations $ 29,034 $ 45,010 $ 105,483 $ 81,946 (1) Corporate includes costs associated with general and administrative and other expenses that are managed on a global basis and that are not directly attributable to any particular segment. (2) Operating expenses for each segment include other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expense, depreciation and amortization and other administrative expenses. For the nine months ended September 30, 2021, goodwill impairment related to our B2B Backup business is also included within operating expenses for Cybersecurity and Martech. For the three and nine months ended September 30, 2022, the Company had an impairment to goodwill within operating expenses for Digital Media. |
Total Assets, Capital Expenditures, Depreciation and Amortization | The CODM does not use Balance Sheet and Cash Flow information in connection with operating and investment decisions other than as presented for Digital Media and Cybersecurity and Martech. Accordingly, the following segment information is presented for Digital Media and Cybersecurity and Martech. September 30, 2022 December 31, 2021 Assets: Digital Media $ 2,014,843 $ 2,043,204 Cybersecurity and Martech 970,482 1,088,741 Total assets from reportable segments 2,985,325 3,131,945 Corporate 447,743 638,335 Total assets $ 3,433,068 $ 3,770,280 Nine Months Ended September 30, 2022 2021 Capital expenditures Digital Media $ 69,451 $ 51,995 Cybersecurity and Martech 11,312 20,248 Total from reportable segments 80,763 72,243 Corporate 4 — Capital expenditures of discontinued operations — 15,252 Total capital expenditures $ 80,767 $ 87,495 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Depreciation and amortization: Digital Media $ 44,631 $ 50,056 $ 138,297 $ 147,482 Cybersecurity and Martech 11,445 12,742 36,566 39,803 Total from reportable segments 56,076 62,798 174,863 187,285 Corporate (139) 79 17 217 Depreciation and amortization of discontinued operations — 3,340 — 8,941 Total depreciation and amortization $ 55,937 $ 66,217 $ 174,880 $ 196,443 |
Revenues and Long-lived Assets by Geographic Information | The Company maintains operations in the U.S., Canada, Ireland, the United Kingdom, India and other countries. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on jurisdictions where revenues are reported (in thousands). Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenues: United States $ 291,164 $ 297,123 $ 841,396 $ 837,656 Canada 8,629 8,284 24,780 24,596 Ireland 8,075 8,603 24,619 27,657 All other countries 34,005 41,134 103,502 118,185 Total $ 341,873 $ 355,144 $ 994,297 $ 1,008,094 September 30, 2022 December 31, 2021 Long-lived assets: United States $ 644,327 $ 726,128 All other countries 69,563 63,423 Total $ 713,890 $ 789,551 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Non-Cash Investing And Financing Activities | Non-cash investing and financing activities were as follows (in thousands): Nine Months Ended September 30, 2022 2021 (1) Non-cash investing activity: Property and equipment, accrued but unpaid $ 184 $ 219 Right-of-use assets acquired in exchange for operating lease obligations $ 4,130 $ 9,274 Disposition of Investment in Consensus (2) $ 112,286 $ — Non-cash financing activity: Debt principal settled in exchange for Investment in Consensus (2) $ 112,286 $ — (1) Combines continuing and discontinued operations. (2) The Company disposed $160.1 million of its Investment in Consensus in exchange for $112.3 million of debt and recorded $47.8 million of loss on investment, net. |
Other Supplemental Data | Supplemental data (in thousands): Nine Months Ended September 30, 2022 2021 Interest paid $ 20,718 $ 29,467 Income taxes paid, net of refunds $ 31,632 $ 49,859 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Balances in Other Comprehensive Income | The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax, for the three months ended September 30, 2022 (in thousands): Unrealized Gains (Losses) on Investments Foreign Currency Translation Total Balance as of July 1, 2022 $ 169 $ (83,865) $ (83,696) Other comprehensive loss (169) (24,753) (24,922) Balance as of September 30, 2022 $ — $ (108,618) $ (108,618) The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax, for the nine months ended September 30, 2022 (in thousands): Unrealized Gains (Losses) on Investments Foreign Currency Translation Total Balance as of January 1, 2022 $ 169 $ (57,391) $ (57,222) Other comprehensive loss (169) (51,227) (51,396) Balance as of September 30, 2022 $ — $ (108,618) $ (108,618) |
Basis of Presentation and Ove_3
Basis of Presentation and Overview (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||
Sep. 14, 2022 shares | Jun. 09, 2022 shares | Oct. 07, 2021 | Sep. 30, 2022 USD ($) shares | Jun. 30, 2022 USD ($) shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Sep. 15, 2022 USD ($) | Jun. 10, 2022 USD ($) | Jan. 01, 2022 USD ($) | Jun. 30, 2021 USD ($) | Dec. 31, 2020 USD ($) | Nov. 15, 2019 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Spinoff, percentage of stock distributed | 80.10% | |||||||||||||||
Shares received, as a ratio | 0.3333 | |||||||||||||||
Shares issued in debt-for-equity exchange (in shares) | shares | 500,000 | 2,300,000 | 500,000 | 2,800,000 | ||||||||||||
Shares held | shares | 1,200,000 | 1,200,000 | 1,200,000 | |||||||||||||
Impairment loss | $ 400,000 | |||||||||||||||
Impairment of long-lived assets to be disposed of | $ 9,400,000 | |||||||||||||||
Goodwill and intangible asset impairment | $ 27,400,000 | $ 0 | 27,400,000 | 32,600,000 | ||||||||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2020-06 [Member] | |||||||||||||||
Increase (decrease) in equity | $ 1,793,645,000 | $ 1,794,196,000 | 1,793,645,000 | 1,369,259,000 | 1,793,645,000 | 1,369,259,000 | $ 1,967,732,000 | $ 1,294,500,000 | $ 1,211,018,000 | |||||||
Public Stock Offering | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Shares issued in offering (in shares) | shares | 500,000 | 2,000,000 | ||||||||||||||
Over-Allotment Option | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Shares issued in offering (in shares) | shares | 300,000 | |||||||||||||||
Underwriter option period | 30 days | |||||||||||||||
Common stock | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Increase (decrease) in equity | 472,000 | 472,000 | 472,000 | 478,000 | 472,000 | 478,000 | 474,000 | 447,000 | 443,000 | |||||||
Retained earnings | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Increase (decrease) in equity | 1,469,519,000 | 1,451,316,000 | 1,469,519,000 | 931,477,000 | 1,469,519,000 | 931,477,000 | 1,515,358,000 | 892,605,000 | 809,107,000 | |||||||
Additional paid-in capital | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Increase (decrease) in equity | $ 432,272,000 | $ 426,104,000 | $ 432,272,000 | $ 508,493,000 | $ 432,272,000 | $ 508,493,000 | 509,122,000 | $ 461,422,000 | $ 456,274,000 | |||||||
Cumulative Effect, Period of Adoption, Adjustment | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Increase in debt | $ 85,900,000 | |||||||||||||||
Increase (decrease) in equity | (64,701,000) | |||||||||||||||
Decrease in deferred tax liabilities | 21,200,000 | |||||||||||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained earnings | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Increase (decrease) in equity | 23,436,000 | 23,400,000 | ||||||||||||||
Cumulative Effect, Period of Adoption, Adjustment | Additional paid-in capital | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Increase (decrease) in equity | $ (88,137,000) | $ (88,100,000) | ||||||||||||||
1.75% Convertible Notes | Convertible Debt | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Debt instrument, face amount | $ 550,000,000 | |||||||||||||||
Stated interest rate | 1.75% | 1.75% | ||||||||||||||
Revolving Credit Facility | Secured Debt | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Debt instrument, face amount | $ 22,300,000 | $ 90,000,000 | ||||||||||||||
Minimum | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Finite-lived intangible asset, useful life | 1 year | |||||||||||||||
Maximum | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Finite-lived intangible asset, useful life | 20 years | |||||||||||||||
Consensus | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Ownership percentage | 19.90% |
Revenues (Narrative) (Details)
Revenues (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||||
Contract liability, revenue recognized | $ 32,200 | $ 27,700 | $ 154,900 | $ 140,400 | |
Revenue, remaining performance obligation | $ 24,000 | $ 24,000 | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |||||
Disaggregation of Revenue [Line Items] | |||||
Remaining performance obligation, percent | 20% | 20% | |||
Remaining performance obligation, period | 3 months | 3 months | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |||||
Disaggregation of Revenue [Line Items] | |||||
Remaining performance obligation, percent | 78% | 78% | |||
Remaining performance obligation, period | 1 year | 1 year | |||
Fiscal 2022 Acquisitions | |||||
Disaggregation of Revenue [Line Items] | |||||
Deferred revenue | $ 21,332 | $ 21,332 | |||
Fiscal 2021 Acquisitions | |||||
Disaggregation of Revenue [Line Items] | |||||
Deferred revenue | $ 7,806 | $ 7,806 | $ 9,500 |
Revenues (Disaggregation of Rev
Revenues (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 341,873 | $ 355,144 | $ 994,297 | $ 1,008,094 |
Point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 14,417 | 13,607 | 32,602 | 30,669 |
Over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 327,456 | 341,537 | 961,695 | 977,425 |
Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 341,873 | 355,144 | 994,297 | 1,008,094 |
Operating Segments | Digital Media | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 263,896 | 262,429 | 757,423 | 743,280 |
Operating Segments | Cybersecurity and Martech | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 78,192 | 93,071 | 237,596 | 265,580 |
Operating Segments | Advertising | Digital Media | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 186,921 | 198,794 | 546,186 | 574,465 |
Operating Segments | Subscription | Digital Media | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 64,780 | 52,010 | 179,257 | 145,935 |
Operating Segments | Subscription | Cybersecurity and Martech | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 78,192 | 93,071 | 237,596 | 265,580 |
Operating Segments | Other | Digital Media | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 12,195 | 11,625 | 31,980 | 22,880 |
Elimination of inter-segment revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ (215) | $ (356) | $ (722) | $ (766) |
Business Acquisitions (Narrativ
Business Acquisitions (Narrative) (Details) | 9 Months Ended | 12 Months Ended | ||
Jun. 04, 2021 USD ($) | Sep. 30, 2022 USD ($) business | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 1,579,957,000 | $ 1,531,455,000 | ||
Goodwill acquired during period | 93,827,000 | |||
Increase (decrease) in goodwill from adjustment under purchase accounting | 4,806,000 | |||
Increase to goodwill related to an assumed liability | $ 3,200,000 | |||
Recognition period | 4 years | |||
Series of Individually Immaterial Business Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Number of businesses acquired | business | 4 | |||
Fiscal 2022 Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Revenue of acquiree since acquisition date | $ 19,600,000 | |||
Total consideration of transactions | 121,700,000 | |||
Fair value of accounts receivable acquired | 7,400,000 | |||
Amount expected to be uncollectable | 0 | |||
Goodwill | 93,827,000 | |||
Expected income tax deductible amount | 1,200,000 | |||
Accounts receivable | 7,433,000 | |||
Fiscal 2022 Acquisitions | Digital Media | ||||
Business Acquisition [Line Items] | ||||
Increase (decrease) in goodwill from adjustment under purchase accounting | 4,900,000 | |||
Fiscal 2022 Acquisitions | Cybersecurity and Martech | ||||
Business Acquisition [Line Items] | ||||
Increase (decrease) in goodwill from adjustment under purchase accounting | $ (100,000) | |||
Fiscal 2021 Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Revenue of acquiree since acquisition date | $ 21,300,000 | |||
Total consideration of transactions | 134,300,000 | |||
Goodwill | 84,019,000 | |||
Accounts receivable | 4,577,000 | |||
SEOmoz Acquisition | ||||
Business Acquisition [Line Items] | ||||
Revenue of acquiree since acquisition date | $ 14,400,000 | |||
Total consideration of transactions | $ 67,000,000 | |||
Amount expected to be uncollectable | 300,000 | |||
Goodwill | 41,192,000 | |||
Goodwill acquired during period | 41,200,000 | |||
Expected income tax deductible amount | $ 0 | |||
Accounts receivable | 3,278,000 | |||
Gross amounts due under contracts | $ 3,600,000 |
Business Acquisitions (Allocati
Business Acquisitions (Allocation of Aggregate Purchase Price) (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 04, 2021 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 1,579,957 | $ 1,531,455 | ||
Fiscal 2022 Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable | 7,433 | |||
Prepaid expenses and other current assets | 4,915 | |||
Property and equipment | 369 | |||
Operating lease right-of-use assets, noncurrent | 546 | |||
Goodwill | 93,827 | |||
Other long-term assets | 11 | |||
Accounts payables and accrued expenses | (4,656) | |||
Deferred revenue | (21,332) | |||
Deferred tax liability | (10,436) | |||
Other long-term liabilities | (516) | |||
Total | 121,704 | |||
Fiscal 2022 Acquisitions | Trade names | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible assets | 12,838 | |||
Fiscal 2022 Acquisitions | Customer relationship | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible assets | 20,540 | |||
Fiscal 2022 Acquisitions | Other intangibles | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible assets | $ 18,165 | |||
Fiscal 2021 Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable | $ 4,577 | |||
Prepaid expenses and other current assets | 2,585 | |||
Property and equipment | 1,838 | |||
Operating lease right-of-use assets, noncurrent | 5,888 | |||
Goodwill | 84,019 | |||
Other long-term assets | 62 | |||
Deferred tax asset | 231 | |||
Accounts payables and accrued expenses | (2,891) | |||
Deferred revenue | $ (9,500) | (7,806) | ||
Operating lease liabilities, current | (7,191) | |||
Other current liabilities | (14) | |||
Deferred tax liability | (4,122) | |||
Other long-term liabilities | (1,726) | |||
Total | 134,342 | |||
Fiscal 2021 Acquisitions | Trade names | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible assets | 11,118 | |||
Fiscal 2021 Acquisitions | Customer relationship | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible assets | 13,396 | |||
Fiscal 2021 Acquisitions | Other intangibles | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible assets | $ 34,378 | |||
SEOmoz Acquisition | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable | $ 3,278 | |||
Prepaid expenses and other current assets | 2,512 | |||
Property and equipment | 1,838 | |||
Operating lease right-of-use assets, noncurrent | 5,888 | |||
Goodwill | 41,192 | |||
Other long-term assets | 62 | |||
Accounts payables and accrued expenses | (2,421) | |||
Deferred revenue | (7,048) | |||
Operating lease liabilities, current | (7,191) | |||
Other current liabilities | (14) | |||
Deferred tax liability | (4,122) | |||
Other long-term liabilities | (785) | |||
Total | 66,996 | |||
SEOmoz Acquisition | Trade names | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible assets | 7,200 | |||
SEOmoz Acquisition | Customer relationship | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible assets | 5,000 | |||
SEOmoz Acquisition | Other intangibles | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible assets | $ 21,607 |
Business Acquisitions (Pro Form
Business Acquisitions (Pro Forma Financial Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Fiscal 2022 Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Revenues | $ 342,173 | $ 366,258 | $ 1,010,600 | $ 1,041,436 |
Net income (loss) from continuing operations | $ 18,120 | $ 4,925 | $ (3,801) | $ 23,369 |
(Loss) income per common share from continuing operations - Basic (usd per share) | $ 0.39 | $ 0.11 | $ (0.08) | $ 0.52 |
(Loss) income per common share from continuing operations - Diluted (usd per share) | $ 0.39 | $ 0.10 | $ (0.08) | $ 0.49 |
Fiscal 2021 Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Revenues | $ 374,202 | $ 1,045,184 | ||
Net income (loss) from continuing operations | $ 6,886 | $ 25,490 | ||
(Loss) income per common share from continuing operations - Basic (usd per share) | $ 0.15 | $ 0.56 | ||
(Loss) income per common share from continuing operations - Diluted (usd per share) | $ 0.14 | $ 0.54 | ||
SEOmoz Acquisition | ||||
Business Acquisition [Line Items] | ||||
Revenues | $ 367,414 | $ 1,028,545 | ||
Net income (loss) from continuing operations | $ 6,610 | $ 24,030 | ||
(Loss) income per common share from continuing operations - Basic (usd per share) | $ 0.14 | $ 0.53 | ||
(Loss) income per common share from continuing operations - Diluted (usd per share) | $ 0.14 | $ 0.51 |
Investments (Narrative) (Detail
Investments (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Sep. 25, 2017 | Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Apr. 12, 2022 | Dec. 31, 2021 | |
Debt Securities, Available-for-sale [Line Items] | ||||||||||
Shares issued in debt-for-equity exchange (in shares) | 500,000 | 2,300,000 | 500,000 | 2,800,000 | ||||||
Cash tender offer (maximum) | $ 22,300 | $ 112,300 | ||||||||
Shares held | 1,200,000 | 1,200,000 | 1,200,000 | |||||||
Impairment loss on equity securities | $ 16,700 | |||||||||
Fair Value | $ 15,000 | $ 15,000 | $ 15,000 | |||||||
Variable interest entity, amount committed to invest | $ 200,000 | |||||||||
Annual management fee percentage | 2% | |||||||||
Entitled carried interest percentage | 20% | |||||||||
Investment period | 6 years | |||||||||
Equity securities | 109,228 | 109,228 | 109,228 | $ 122,593 | ||||||
Variable interest entity, amount of capital call notices received | 0 | $ 21,200 | ||||||||
Variable interest entity, amount paid | 21,200 | |||||||||
Distribution from equity method investment | 0 | 15,327 | ||||||||
Income (loss) from equity method investment | (3,191) | $ (1,923) | (10,077) | 16,596 | ||||||
Management fees recognized | 0 | $ 800 | 1,500 | 2,300 | ||||||
OCV Management, LLC | ||||||||||
Debt Securities, Available-for-sale [Line Items] | ||||||||||
Distribution from equity method investment | 0 | $ 0 | ||||||||
Investment in corporate debt securities | ||||||||||
Debt Securities, Available-for-sale [Line Items] | ||||||||||
Debt securities, available-for-sale, coupon rate | 4% | |||||||||
Fair Value | $ 15,000 | $ 15,000 | $ 15,000 | $ 15,000 | ||||||
Ownership interest | 3% | |||||||||
Fund | ||||||||||
Debt Securities, Available-for-sale [Line Items] | ||||||||||
Equity securities | $ 128,800 | |||||||||
Individually Insignificant Equity Securities | ||||||||||
Debt Securities, Available-for-sale [Line Items] | ||||||||||
Ownership percentage | 76.60% |
Investments (Gains (Losses) on
Investments (Gains (Losses) on Equity Securities) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Net gains (losses) during the period | $ 4,672 | $ (61,937) | ||
Less: gains (losses) on securities sold during the period | 471 | $ 0 | (47,772) | $ (16,677) |
Unrealized gain (loss) on short-term investments held at the reporting date, net | $ 4,201 | $ 0 | $ (14,165) | $ 0 |
Investments (Summary of Availab
Investments (Summary of Available-for-sale Investments) (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Apr. 12, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale [Line Items] | |||
Maximum exposure to loss | $ 109,228 | $ 122,593 | |
Amortized Cost | 15,000 | ||
Gross Unrealized Gains | 0 | ||
Gross Unrealized Losses | 0 | ||
Fair Value | 15,000 | ||
Investment in corporate debt securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Maximum exposure to loss | 15,000 | ||
Amortized Cost | 15,000 | ||
Gross Unrealized Gains | 0 | ||
Gross Unrealized Losses | 0 | ||
Fair Value | $ 15,000 | $ 15,000 |
Investments (Available-for-Sale
Investments (Available-for-Sale Securities Classified by Contractual Maturity Date) (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Investments, Debt and Equity Securities [Abstract] | ||
Due within 1 year | $ 0 | $ 0 |
Due within more than 1 year but less than 5 years | 15,000 | 0 |
Due within more than 5 years but less than 10 years | 0 | 0 |
Due 10 years or after | 0 | 0 |
Total | $ 15,000 | $ 0 |
Investments (Carrying Amount fo
Investments (Carrying Amount for Equity Method Investment) (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale [Line Items] | ||
Investment in corporate debt securities | $ 15,000 | |
Maximum exposure to loss | 109,228 | $ 122,593 |
Investment in corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Investment in corporate debt securities | 15,000 | |
Maximum exposure to loss | $ 15,000 |
Discontinued Operations and D_3
Discontinued Operations and Dispositions - Cash Flows from Discontinued Operations (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Deferred income taxes, net | $ (13,552) | $ 2,537 |
Discontinued Operations | J2 Global | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Capital expenditures | 15,252 | |
Depreciation and amortization | 8,941 | |
Deferred income taxes, net | $ 5,306 |
Discontinued Operations and D_4
Discontinued Operations and Dispositions - Assets and Liabilities Held for Sale (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Income from discontinued operations, net of income taxes | $ 0 | $ 35,800 | $ 0 | $ 113,705 |
Discontinued Operations | J2 Global | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | 89,107 | 263,386 | ||
Cost of revenues | (14,605) | (43,129) | ||
Sales and marketing | (13,116) | (40,032) | ||
Research, development and engineering | (2,019) | (5,635) | ||
General and administrative | (8,237) | (20,262) | ||
Interest expense and other | (3,818) | (4,017) | ||
Income before income taxes | 47,312 | 150,311 | ||
Income tax expense | (11,512) | (36,606) | ||
Income from discontinued operations, net of income taxes | $ 35,800 | $ 113,705 |
Discontinued Operations and D_5
Discontinued Operations and Dispositions - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Loss on sale of businesses, net | $ 0 | $ (24,600) | $ 0 | $ (21,798) | |
Goodwill impairment on business | $ 27,369 | 0 | $ 27,369 | 32,629 | |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Voice Assets | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Loss on sale of businesses, net | 2,800 | ||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | B2B Backup Business | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Loss on sale of businesses, net | $ 24,600 | $ 24,600 | |||
Disposal Group, Held-for-sale, Not Discontinued Operations | B2B Backup Business | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Goodwill impairment on business | $ 32,600 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Oct. 07, 2020 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Short-term investments | $ 54,897 | $ 54,897 | $ 229,200 | ||
Unrealized loss | 4,200 | 14,200 | |||
Financial liability value | 1,106 | 1,106 | 5,775 | ||
Contingent consideration payments | (2,919) | $ (5,800) | |||
Fair Value | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Fair value of debt instruments | 891,852 | 891,852 | 1,345,311 | ||
4.625% Senior Notes | Senior Notes | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Fair value of debt instruments | 378,300 | 378,300 | 659,900 | ||
Stated interest rate | 4.625% | ||||
Level 1 | Fair Value | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Fair value of debt instruments | $ 891,852 | $ 891,852 | $ 1,345,311 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Values of Financial Instruments Measured On Recurring Basis) (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in corporate debt securities | $ 15,000 | |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in corporate debt securities | 15,000 | |
Investment in Consensus | 54,897 | $ 229,200 |
Total assets measured at fair value | 240,471 | 373,455 |
Contingent consideration | 1,106 | 5,775 |
Debt | 891,852 | 1,345,311 |
Total liabilities measured at fair value | 892,958 | 1,351,086 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in corporate debt securities | 15,000 | |
Investment in Consensus | 54,897 | 229,200 |
Total assets measured at fair value | 240,471 | 373,455 |
Contingent consideration | 1,106 | 5,775 |
Debt | 998,499 | 1,090,627 |
Total liabilities measured at fair value | 999,605 | 1,096,402 |
Money market and other funds | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Money market and other funds | 170,574 | 144,255 |
Money market and other funds | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Money market and other funds | 170,574 | 144,255 |
Level 1 | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in corporate debt securities | 0 | |
Investment in Consensus | 54,897 | 229,200 |
Total assets measured at fair value | 225,471 | 373,455 |
Contingent consideration | 0 | 0 |
Debt | 891,852 | 1,345,311 |
Total liabilities measured at fair value | 891,852 | 1,345,311 |
Level 1 | Money market and other funds | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Money market and other funds | 170,574 | 144,255 |
Level 2 | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in corporate debt securities | 0 | |
Investment in Consensus | 0 | 0 |
Total assets measured at fair value | 0 | 0 |
Contingent consideration | 0 | 0 |
Debt | 0 | 0 |
Total liabilities measured at fair value | 0 | 0 |
Level 2 | Money market and other funds | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Money market and other funds | 0 | 0 |
Level 3 | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in corporate debt securities | 15,000 | |
Investment in Consensus | 0 | 0 |
Total assets measured at fair value | 15,000 | 0 |
Contingent consideration | 1,106 | 5,775 |
Debt | 0 | 0 |
Total liabilities measured at fair value | 1,106 | 5,775 |
Level 3 | Money market and other funds | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Money market and other funds | $ 0 | $ 0 |
Fair Value Measurements (Reconc
Fair Value Measurements (Reconciliation of Level 3 Financial Assets Measured on Recurring Basis) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance as of January 1, 2022 | $ 0 |
Investment in corporate debt securities | 15,000 |
Balance as of September 30, 2022 | $ 15,000 |
Fair Value Measurements (Reco_2
Fair Value Measurements (Reconciliation of Level 3 Financial Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 5,775 | |
Contingent consideration | 555 | |
Total fair value adjustments reported in earnings | (2,305) | |
Contingent consideration payments | (2,919) | $ (5,800) |
Ending balance | $ 1,106 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Narrative) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) reportingUnit | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) reportingUnit | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill impairment on business | $ 27,369 | $ 0 | $ 27,369 | $ 32,629 | |
Goodwill | 1,579,957 | 1,579,957 | $ 1,531,455 | ||
Amortization expense | 36,300 | $ 46,600 | $ 119,300 | $ 140,700 | |
Digital Media | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Number of reporting units | reportingUnit | 7 | ||||
Goodwill impairment on business | $ 27,400 | 0 | |||
Cybersecurity and Martech | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Number of reporting units | reportingUnit | 2 | ||||
Goodwill impairment on business | $ 32,600 | 32,600 | |||
Operating Segments | Digital Media | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill impairment on business | 27,400 | 27,369 | |||
Goodwill | $ 1,062,108 | 1,062,108 | 996,659 | ||
Operating Segments | Digital Media | Digital Media Subsegment | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Number of reporting units | reportingUnit | 2 | ||||
Goodwill | $ 86,900 | 86,900 | |||
Operating Segments | Cybersecurity and Martech | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill impairment on business | 0 | ||||
Goodwill | $ 517,849 | $ 517,849 | $ 534,796 | ||
Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible asset, useful life | 1 year | ||||
Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible asset, useful life | 20 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Changes in Carrying Amounts of Goodwill) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Goodwill [Roll Forward] | |||||
Beginning balance | $ 1,531,455 | ||||
Goodwill acquired | 93,827 | ||||
Goodwill impairment | $ (27,369) | $ 0 | (27,369) | $ (32,629) | |
Purchase accounting adjustments | 4,806 | ||||
Foreign exchange translation | (22,762) | ||||
Ending balance | 1,579,957 | 1,579,957 | $ 1,531,455 | ||
Digital Media | |||||
Goodwill [Roll Forward] | |||||
Goodwill impairment | (27,400) | 0 | |||
Cybersecurity and Martech | |||||
Goodwill [Roll Forward] | |||||
Goodwill impairment | (32,600) | (32,600) | |||
Operating Segments | Digital Media | |||||
Goodwill [Roll Forward] | |||||
Beginning balance | 996,659 | ||||
Goodwill acquired | 93,827 | ||||
Goodwill impairment | (27,400) | (27,369) | |||
Purchase accounting adjustments | 4,943 | ||||
Foreign exchange translation | (5,952) | ||||
Ending balance | 1,062,108 | 1,062,108 | 996,659 | ||
Operating Segments | Cybersecurity and Martech | |||||
Goodwill [Roll Forward] | |||||
Beginning balance | 534,796 | ||||
Goodwill acquired | 0 | ||||
Goodwill impairment | 0 | ||||
Purchase accounting adjustments | (137) | ||||
Foreign exchange translation | (16,810) | ||||
Ending balance | $ 517,849 | $ 517,849 | $ 534,796 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Intangible Assets Subject to Amortization) (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Historical Cost | $ 1,425,559 | $ 1,391,293 |
Accumulated Amortization | 927,107 | 818,568 |
Net | $ 498,452 | $ 572,725 |
Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period | 1 year | |
Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period | 20 years | |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period | 10 years | 9 years 8 months 12 days |
Historical Cost | $ 261,070 | $ 250,418 |
Accumulated Amortization | 119,026 | 102,657 |
Net | $ 142,044 | $ 147,761 |
Customer relationship | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period | 7 years 10 months 24 days | 8 years 1 month 6 days |
Historical Cost | $ 683,503 | $ 673,847 |
Accumulated Amortization | 456,377 | 398,396 |
Net | $ 227,126 | $ 275,451 |
Customer relationship | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period | 4 years | 4 years |
Customer relationship | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period | 5 years | 5 years |
Other purchased intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period | 8 years 7 months 6 days | 9 years 3 months 18 days |
Historical Cost | $ 480,986 | $ 467,028 |
Accumulated Amortization | 351,704 | 317,515 |
Net | $ 129,282 | $ 149,513 |
Debt (Long-term Debt) (Details)
Debt (Long-term Debt) (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Jan. 01, 2022 | Dec. 31, 2021 | Oct. 07, 2020 | Nov. 15, 2019 |
Debt Instrument [Line Items] | |||||
Less: Unamortized discount | $ (2,837) | $ (91,593) | |||
Deferred issuance costs | (8,702) | (9,056) | |||
Total debt | 998,499 | 1,090,627 | |||
Less: current portion | 0 | (54,609) | |||
Total long-term debt, less current portion | 998,499 | 1,036,018 | |||
Senior Notes | 4.625% Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate | 4.625% | ||||
Long-term debt, gross | 460,038 | 641,276 | |||
Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | 1,010,038 | 1,191,276 | |||
Convertible Debt | 1.75% Convertible Notes | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate | 1.75% | 1.75% | |||
Long-term debt, gross | $ 550,000 | $ 550,000 | |||
Deferred issuance costs | $ (2,800) |
Debt (Narrative) (Details)
Debt (Narrative) (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||
Jun. 10, 2022 USD ($) | Apr. 07, 2021 USD ($) | Oct. 07, 2020 USD ($) fiscalQuarterPeriod | Nov. 15, 2019 USD ($) tradingDay | Jun. 10, 2014 USD ($) | Sep. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) shares | Sep. 15, 2022 USD ($) | Jan. 01, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | ||||||||||||||
Cash tender offer (maximum) | $ 22,300,000 | $ 112,300,000 | ||||||||||||
Gain on debt extinguishment, net | 10,112,000 | $ 0 | 11,505,000 | $ 0 | ||||||||||
Unamortized discount | $ 2,837,000 | 2,837,000 | 2,837,000 | $ 91,593,000 | ||||||||||
Deferred issuance costs | $ 8,702,000 | $ 8,702,000 | 8,702,000 | 9,056,000 | ||||||||||
Repayments of long-term debt | 166,904,000 | 402,414,000 | ||||||||||||
Proceeds from bridge loan | $ 0 | 485,000,000 | ||||||||||||
Shares issued in debt-for-equity exchange (in shares) | shares | 500,000 | 2,300,000 | 500,000 | 2,800,000 | ||||||||||
Revolving Credit Facility | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 100,000,000 | |||||||||||||
Increase available | 250,000,000 | |||||||||||||
Total aggregate commitment | $ 350,000,000 | |||||||||||||
Long-term line of credit | $ 0 | $ 0 | $ 0 | 0 | ||||||||||
4.625% Senior Notes | Senior Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Stated interest rate | 4.625% | |||||||||||||
Percentage principal outstanding to be eligible for redemption | 50% | |||||||||||||
Covenant, leverage ratio, minimum | 3.5 | |||||||||||||
Covenant restricted payment threshold | $ 250,000,000 | |||||||||||||
Covenant, EBITDA minimum | 50% | |||||||||||||
Covenant, EBITDA minimum, fiscal quarter period | fiscalQuarterPeriod | 4 | |||||||||||||
Extinguishment of debt, principle amount | 105,100,000 | 181,200,000 | ||||||||||||
Cash tender offer (maximum) | 94,100,000 | 167,700,000 | ||||||||||||
Gain on debt extinguishment, net | 10,200,000 | 12,100,000 | ||||||||||||
Fair value of debt instruments | $ 378,300,000 | $ 378,300,000 | $ 378,300,000 | 659,900,000 | ||||||||||
Debt instrument, face amount | $ 750,000,000 | |||||||||||||
Proceeds from debt, net of issuance costs | $ 742,700,000 | |||||||||||||
4.625% Senior Notes | Senior Notes | Debt Instrument, Redemption, Period One | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Percentage of principal amount redeemed | 40% | |||||||||||||
Redemption price, percentage | 104.625% | |||||||||||||
4.625% Senior Notes | Senior Notes | Debt Instrument, Redemption, Period Two | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Redemption price, percentage | 100% | |||||||||||||
1.75% Convertible Notes | Convertible Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Stated interest rate | 1.75% | 1.75% | ||||||||||||
Preferred stock, convertible, conversion ratio | 0.0093783 | 0.0093783 | 0.0093783 | |||||||||||
Fair value of debt instruments | $ 513,600,000 | $ 513,600,000 | $ 513,600,000 | $ 685,400,000 | ||||||||||
Debt instrument, face amount | $ 550,000,000 | |||||||||||||
Proceeds from debt, net of issuance costs | 537,100,000 | |||||||||||||
Convertible debt conversion price (in usd per share) | $ / shares | $ 106.63 | $ 106.63 | $ 106.63 | |||||||||||
Gross debt issuance costs | 12,900,000 | |||||||||||||
Accumulated amortization of debt issuance costs | 10,100,000 | |||||||||||||
Deferred issuance costs | $ 2,800,000 | |||||||||||||
Unamortized debt issuance expense | $ 7,800,000 | $ 7,800,000 | $ 7,800,000 | |||||||||||
1.75% Convertible Notes | Convertible Debt | Cumulative Effect, Period of Adoption, Adjustment | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Unamortized discount | $ 87,300,000 | |||||||||||||
1.75% Convertible Notes | Convertible Debt | Debt Instrument, Redemption, Period One | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Convertible debt threshold trading days | tradingDay | 20 | |||||||||||||
Convertible debt threshold consecutive trading days | tradingDay | 30 | |||||||||||||
Percentage of stock price | 130% | |||||||||||||
1.75% Convertible Notes | Convertible Debt | Debt Instrument, Redemption, Period Two | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Convertible debt threshold trading days | tradingDay | 5 | |||||||||||||
Convertible debt threshold consecutive trading days | tradingDay | 10 | |||||||||||||
Percentage of product of stock price and conversion rate | 98% | |||||||||||||
3.25% Convertible Notes | Convertible Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Stated interest rate | 3.25% | |||||||||||||
Debt instrument, face amount | $ 402,500,000 | |||||||||||||
Debt instrument, contingent interest period | 6 months | |||||||||||||
Debt instrument, trading period | 5 days | |||||||||||||
Price per principal amount | $ 1,300 | |||||||||||||
Repayments of long-term debt | $ 399,600,000 | $ 402,400,000 | ||||||||||||
Redemption of 3.25% Convertible Note including tax impact (in shares) | shares | 3,031,817 | 3,050,850 | ||||||||||||
6.0% Senior Notes | Senior Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Stated interest rate | 6% | |||||||||||||
Bridge Loan Facility | Base Rate | Minimum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 0.50% | |||||||||||||
Bridge Loan Facility | Base Rate | Maximum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 1.25% | |||||||||||||
Bridge Loan Facility | LIBOR | Minimum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 1.50% | |||||||||||||
Bridge Loan Facility | LIBOR | Maximum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 2.25% | |||||||||||||
Bridge Loan Facility | Bridge Loan | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 1% | |||||||||||||
Calculation denominator | 1 | |||||||||||||
Bridge Loan Facility | Bridge Loan | Federal Funds Effective Rate | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 0.50% | |||||||||||||
Revolving Credit Facility | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Gain on debt extinguishment, net | (100,000) | $ (600,000) | ||||||||||||
Debt instrument, face amount | $ 90,000,000 | $ 22,300,000 | ||||||||||||
Credit Agreement | Line of Credit | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Cash tender offer (maximum) | $ 22,300,000 | |||||||||||||
Debt instrument, face amount | $ 90,000,000 | $ 22,300,000 | ||||||||||||
Maturity date, period after funding date | 60 days | |||||||||||||
Proceeds from bridge loan | $ 22,300,000 | $ 90,000,000 | ||||||||||||
Credit Agreement | Line of Credit | Secured Debt | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 1% | |||||||||||||
Credit Agreement | Line of Credit | Secured Debt | Federal Funds Effective Rate | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 0.50% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Loss contingencies accrued | $ 24.3 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | 45.90% | (44.20%) | 83.90% | 142.30% | |
Deferred tax and other liabilities | $ 11.3 | $ 11.3 | |||
Deferred tax assets | 6.7 | 6.7 | |||
Increase for debt redemption | $ 44.2 | $ 44.2 | |||
Increase in deferred tax liability | $ 44.2 | 44.2 | |||
Income (loss) before income taxes, domestic operations | 0.3 | (63.1) | |||
Income before income taxes, foreign operations | 39.3 | $ 49.1 | |||
Unrecognized tax benefits | 45.4 | 45.4 | $ 42.5 | ||
Prepaid tax payments | $ 0 | $ 0 | $ 0.8 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Aug. 06, 2020 | Jun. 10, 2014 | |
Equity, Class of Treasury Stock [Line Items] | ||||||
Repurchase and retirement of common stock | $ 200 | $ 6,921 | $ 76,545 | $ 29,855 | ||
Number of remaining shares available for purchase (in shares) | 6,327,154 | 6,327,154 | ||||
Number of shares purchased from plan participants (in shares) | 2,601 | 49,641 | 52,837 | 245,083 | ||
Tax withholding aggregate cost | $ 200 | $ 6,900 | $ 5,200 | $ 29,900 | ||
3.25% Convertible Notes | Convertible Debt | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stated interest rate | 3.25% | |||||
Redemption of 3.25% Convertible Note including tax impact (in shares) | 3,031,817 | 3,050,850 | ||||
Common stock | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Repurchase and retirement of common stock (in shares) | 2,601 | 49,641 | 789,373 | 245,083 | ||
Repurchase and retirement of common stock | $ 1 | $ 7 | $ 3 | |||
Redemption of 3.25% Convertible Note including tax impact (in shares) | 3,031,817 | 3,050,850 | ||||
2020 Repurchase Program | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Maximum number of shares authorized to be repurchased (in shares) | 10,000,000 | |||||
Repurchase and retirement of common stock (in shares) | 0 | 736,536 | ||||
Repurchase and retirement of common stock | $ 71,300 | |||||
Shares repurchased under the program (in shares) | 3,672,846 | |||||
Aggregate cost of shares repurchased | $ 296,900 |
Stock Based Compensation (Narra
Stock Based Compensation (Narrative) (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 USD ($) d $ / shares shares | Sep. 30, 2021 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Issuance of common stock under employee stock purchase plan | $ | $ 5,235 | $ 4,232 | |
Restricted Stock And Restricted Stock Unit (RSU) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 152,982 | 91,163 | |
Restricted Stock And Restricted Stock Unit (RSU) | Board of Directors | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting periods | 1 year | ||
Restricted Stock And Restricted Stock Unit (RSU) | Chief Executive Officer | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting periods | 8 years | ||
Market-based Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 100,193 | 73,094 | |
Trading days | d | 20 | ||
Trading days, lookback | d | 30 | ||
Weighted-average grant-date fair values of restricted stock awards granted (in usd per share) | $ / shares | $ 87.11 | $ 94.40 | |
Weighted-average period to recognize compensation cost (in years) | 3 years | ||
Restricted Stock, Restricted Stock Unit (RSU), Market-based Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation cost related to non-vested awards granted | $ | $ 48,200 | $ 44,300 | |
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 253,175 | ||
Weighted-average period to recognize compensation cost (in years) | 3 years 8 months 12 days | ||
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum issuance of common stock (in shares) | 2,000,000 | ||
Market value of common stock on the date of grant for incentive stock options | 85% | ||
Maximum earnings withheld by the employees | 15% | ||
Estimated forfeiture rate | 11.15% | 11.15% | |
Issuance of shares under employee stock purchase plan (in shares) | 76,741 | 58,145 | |
Number of shares available for issuance (in shares) | 1,218,950 | ||
Minimum | Restricted Stock And Restricted Stock Unit (RSU) | Senior Staff | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting periods | 4 years | ||
Maximum | Restricted Stock And Restricted Stock Unit (RSU) | Senior Staff | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting periods | 5 years | ||
2007 Stock Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum issuance of common stock (in shares) | 4,500,000 | ||
Purchase price of common stock, percent | 85% | ||
Number of options outstanding (in shares) | 0 | ||
Number of stocks outstanding (in shares) | 0 | ||
2015 Stock Option Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum issuance of common stock (in shares) | 4,200,000 | ||
Number of options outstanding (in shares) | 435,135 | ||
Number of stocks outstanding (in shares) | 526,656 | ||
2015 Stock Option Plan | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Market value of common stock on the date of grant for incentive stock options | 100% |
Stock Based Compensation (Marke
Stock Based Compensation (Market-Based Restricted Stock Awards, Valuation Assumptions) (Details) - Restricted (Performance) Stock - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Underlying stock price at valuation date (in usd per share) | $ 99.32 | $ 113.27 |
Expected/ weighted average volatility | 36.70% | 30.30% |
Risk-free interest rate | 1.80% | 1.30% |
Stock Based Compensation (Restr
Stock Based Compensation (Restricted Stock and Restricted Stock Unit Award Activity) (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
Restricted Stock | |
Number of Shares | |
Nonvested at beginning of period (in shares) | 383,963 |
Granted (in shares) | 0 |
Vested (in shares) | (65,831) |
Canceled (in shares) | (1,605) |
Nonvested at end of period (in shares) | 316,527 |
Number of Shares | |
Granted (in shares) | 0 |
Vested (in shares) | (65,831) |
Canceled (in shares) | (1,605) |
Weighted-Average Grant-Date Fair Value | |
Nonvested at beginning of period (in usd per share) | $ / shares | $ 62.65 |
Granted (in usd per share) | $ / shares | 0 |
Vested (in usd per share) | $ / shares | 80.89 |
Canceled (in usd per share) | $ / shares | 93.75 |
Nonvested at end of period (in usd per share) | $ / shares | $ 60.11 |
Restricted Stock Units | |
Number of Shares | |
Granted (in shares) | 253,175 |
Vested (in shares) | (74,604) |
Canceled (in shares) | (12,658) |
Number of Shares | |
Outstanding at beginning of period (in shares) | 360,743 |
Granted (in shares) | 253,175 |
Vested (in shares) | (74,604) |
Canceled (in shares) | (12,658) |
Outstanding at end of period (in shares) | 526,656 |
Vested and expected to vest at end of period (in shares) | 385,498 |
Weighted-Average Remaining Contractual Term (in years) | |
Outstanding at end of period | 2 years 7 months 6 days |
Vested and expected to vest at end of period | 2 years 2 months 12 days |
Aggregate Intrinsic Value | |
Outstanding at end of period | $ | $ 36,065,403 |
Vested and expected to vest at end of period | $ | $ 26,398,925 |
Stock Based Compensation (Emplo
Stock Based Compensation (Employee Stock Purchase Plan, Valuation Assumptions) (Details) - ESPP | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 1.54% | 0.06% |
Expected term (in years) | 6 months | 6 months |
Dividend yield | 0% | 0% |
Expected/ weighted average volatility | 41.60% | 35.62% |
Earnings Per Share (Components
Earnings Per Share (Components of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jan. 01, 2022 | Nov. 15, 2019 | |
Numerator for basic and diluted net income per common share: | ||||||
Net income from continuing operations - basic | $ 18,185 | $ 6,769 | $ (3,714) | $ 22,504 | ||
Net income available to participating securities - basic | (4) | (4) | 0 | (24) | ||
Net income available to the Company’s common shareholders from continuing operations, basic | 18,181 | 6,765 | (3,714) | 22,480 | ||
Net income from continuing operations - diluted | 18,185 | 6,769 | (3,714) | 22,504 | ||
Net income available to participating securities - diluted | (4) | (4) | 0 | (24) | ||
1.75% convertible notes interest expense (after-tax) | 0 | 0 | 0 | 0 | ||
Net income available to the Company’s common shareholders from continuing operations, diluted | $ 18,181 | $ 6,765 | $ (3,714) | $ 22,480 | ||
Denominator: | ||||||
Basic (in shares) | 46,871,897 | 46,738,073 | 46,967,671 | 45,258,819 | ||
Dilutive effect of: | ||||||
Equity incentive plans (in shares) | 0 | 332,532 | 0 | 272,178 | ||
Convertible debt (in shares) | 0 | 1,511,980 | 0 | 2,034,065 | ||
Common stock and common stock equivalents (in shares) | 46,871,897 | 48,582,585 | 46,967,671 | 47,565,062 | ||
Net income per share from continuing operations - basic (in dollars per share) | $ 0.39 | $ 0.14 | $ (0.08) | $ 0.50 | ||
Net income per share from continuing operations - diluted (in dollars per share) | $ 0.39 | $ 0.14 | $ (0.08) | $ 0.47 | ||
1.75% Convertible Notes | Convertible Debt | ||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||||
Stated interest rate | 1.75% | 1.75% |
Earnings Per Share (Narrative)
Earnings Per Share (Narrative) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Stock Options And Restricted Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 1,278,330 | 0 | 1,278,330 | 0 |
Convertible Debt Securities | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 5,158,071 | 0 | 5,158,071 | 0 |
Segment Information (Reconcilia
Segment Information (Reconciliation of Total Segment Operating Income to Consolidated Operating Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 341,873 | $ 355,144 | $ 994,297 | $ 1,008,094 |
Gross profit | 289,270 | 305,446 | 849,590 | 865,759 |
Operating expenses | 260,236 | 260,436 | 744,107 | 783,813 |
Operating income | 29,034 | 45,010 | 105,483 | 81,946 |
Reportable segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 341,873 | 355,144 | 994,297 | 1,008,094 |
Gross profit | 289,270 | 305,446 | 849,590 | 865,833 |
Operating expenses | 248,123 | 245,070 | 706,795 | 740,028 |
Operating income | 41,147 | 60,376 | 142,795 | 125,805 |
Elimination of inter-segment revenues | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | (215) | (356) | (722) | (766) |
Gross profit | (212) | (88) | (701) | (214) |
Operating expenses | (212) | (88) | (701) | (214) |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Gross profit | 0 | 0 | 0 | (74) |
Operating expenses | 12,113 | 15,366 | 37,312 | 43,785 |
Operating income | (12,113) | (15,366) | (37,312) | (43,859) |
Digital Media | Reportable segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 263,896 | 262,429 | 757,423 | 743,280 |
Gross profit | 232,887 | 238,650 | 676,040 | 673,409 |
Operating expenses | 205,570 | 188,950 | 571,980 | 548,960 |
Operating income | 27,317 | 49,700 | 104,060 | 124,449 |
Cybersecurity and Martech | Reportable segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 78,192 | 93,071 | 237,596 | 265,580 |
Gross profit | 56,595 | 66,884 | 174,251 | 192,638 |
Operating expenses | 42,765 | 56,208 | 135,516 | 191,282 |
Operating income | $ 13,830 | $ 10,676 | $ 38,735 | $ 1,356 |
Segment Information (Total Asse
Segment Information (Total Assets, Capital Expenditures, Depreciation and Amortization) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Assets | $ 3,433,068 | $ 3,433,068 | $ 3,770,280 | ||
Capital expenditures | 80,767 | $ 87,495 | |||
Depreciation and amortization | 55,937 | $ 66,217 | 174,880 | 196,443 | |
Reportable segments | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Assets | 2,985,325 | 2,985,325 | 3,131,945 | ||
Capital expenditures | 80,763 | 72,243 | |||
Depreciation and amortization | 56,076 | 62,798 | 174,863 | 187,285 | |
Corporate | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Assets | 447,743 | 447,743 | 638,335 | ||
Capital expenditures | 4 | 0 | |||
Depreciation and amortization | (139) | 79 | 17 | 217 | |
Discontinued operations | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Capital expenditures | 0 | 15,252 | |||
Depreciation and amortization | 0 | 3,340 | 0 | 8,941 | |
Digital Media | Reportable segments | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Assets | 2,014,843 | 2,014,843 | 2,043,204 | ||
Capital expenditures | 69,451 | 51,995 | |||
Depreciation and amortization | 44,631 | 50,056 | 138,297 | 147,482 | |
Cybersecurity and Martech | Reportable segments | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Assets | 970,482 | 970,482 | $ 1,088,741 | ||
Capital expenditures | 11,312 | 20,248 | |||
Depreciation and amortization | $ 11,445 | $ 12,742 | $ 36,566 | $ 39,803 |
Segment Information (Revenues a
Segment Information (Revenues and Long-lived Assets by Geographic Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | $ 341,873 | $ 355,144 | $ 994,297 | $ 1,008,094 | |
Long-lived assets | 713,890 | 713,890 | $ 789,551 | ||
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 291,164 | 297,123 | 841,396 | 837,656 | |
Long-lived assets | 644,327 | 644,327 | 726,128 | ||
Canada | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 8,629 | 8,284 | 24,780 | 24,596 | |
Ireland | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 8,075 | 8,603 | 24,619 | 27,657 | |
All other countries | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 34,005 | $ 41,134 | 103,502 | $ 118,185 | |
Long-lived assets | $ 69,563 | $ 69,563 | $ 63,423 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Non-Cash) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Non-cash investing activity: | |||
Property and equipment, accrued but unpaid | $ 184 | $ 219 | |
Right-of-use assets acquired in exchange for operating lease obligations | 4,130 | 9,274 | |
Disposition of investment in consensus | 112,286 | 0 | |
Non-cash financing activity: | |||
Debt principal settled in exchange for Investment in Consensus | 112,286 | $ 0 | |
Disposition of investment | 160,100 | ||
Extinguishment of debt | $ 22,300 | 112,300 | |
Loss on sale ofi nvestments | $ 47,800 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information (Supplemental Data) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Supplemental Cash Flow Elements [Abstract] | ||
Interest paid | $ 20,718 | $ 29,467 |
Income taxes paid, net of refunds | $ 31,632 | $ 49,859 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | $ 1,794,196,000 | $ 1,967,732,000 |
Ending balance | 1,793,645,000 | 1,793,645,000 |
Other comprehensive loss reclassifications | 0 | 0 |
Accumulated other comprehensive loss | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (83,696,000) | (57,222,000) |
Other comprehensive loss | (24,922,000) | (51,396,000) |
Ending balance | (108,618,000) | (108,618,000) |
Consensus separation adjustment | 0 | 4,100,000 |
Unrealized Gains (Losses) on Investments | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | 169,000 | 169,000 |
Other comprehensive loss | (169,000) | (169,000) |
Ending balance | 0 | 0 |
Foreign Currency Translation | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (83,865,000) | (57,391,000) |
Other comprehensive loss | (24,753,000) | (51,227,000) |
Ending balance | $ (108,618,000) | $ (108,618,000) |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 25, 2017 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | ||||||
Due to related party | $ 1,216 | $ 1,216 | $ 9,272 | |||
Reimbursements from related party | 7,200 | 18,700 | ||||
Management fees recognized | 0 | $ 800 | 1,500 | $ 2,300 | ||
Variable interest entity, amount of capital call notices received | 0 | 21,200 | ||||
Variable interest entity, amount paid | $ 21,200 | |||||
Variable interest entity, ownership percentage | 20% | |||||
Investment period | 6 years | |||||
Consensus | Various Agreements | Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses from transactions with related party | 0 | 1,200 | ||||
Offset to lease expense | $ 500 | $ 1,500 |