Ziff Davis Inc.
08/07/2026 | Press release | Distributed by Public on 08/07/2026 14:08
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
In addition to historical information, certain statements included in this Quarterly Report on Form 10-Q may be forward-looking statements, including statements regarding the intent, belief or current expectations of the Company. These statements may include those concerning our possible or assumed future results of operations, business, strategy and current and future acquisitions, as well as the assumptions upon which such statements are based. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements generally are identified by use of the words "anticipates," "believes," "estimates," "hopes," "may," "will," "seeks," "protects," "potential," "predicts," "expects," "plans," "intends," "would," "could," "should," or similar expressions, although not all forward-looking statements contain these identifying words. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed below, the risk factors discussed in Part II, Item 1A - "Risk Factors" of this Quarterly Report on Form 10-Q (if any) and in Part I, Item 1A - "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 (together, the "Risk Factors"), the factors discussed in Part I, Item 3 in this Quarterly Report on Form 10-Q entitled "Quantitative and Qualitative Disclosures About Market Risk", and any risks and uncertainties identified in our other filings with the SEC, as such risks, uncertainties and other important factors may be updated from time to time in our subsequent reports. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions and speak only as of the date they are made. We undertake no obligation to revise, update or publicly release the results of any revision to these forward-looking statements to reflect changed assumptions, new information or the occurrence of unanticipated events, unless required by law.
Some factors that could cause actual results to differ materially from those anticipated in these forward-looking statements include, but are not limited to, our ability and intention to:
◦Sustain growth or profitability, particularly in light of an uncertain U.S. or worldwide economy, including the possibility of an economic downturn or recession, global conflicts, continuing inflation, elevated interest rates, supply chain disruptions, increased tariffs and trade protection measures, and other factors and their related impacts on customer acquisition and retention rates, customer usage levels, and credit and debit card payment declines;
◦Maintain and increase our customer base and average revenue per customer;
◦Generate sufficient cash flow to make interest and debt payments, reinvest in our business, and pursue desired activities and business plans while satisfying restrictive covenants relating to debt obligations;
◦Acquire or divest businesses on acceptable terms, execute on our investment strategies, successfully manage our growth, and integrate and realize anticipated synergies from acquisitions;
◦Realize the anticipated benefits from the divestiture of our Connectivity business;
◦Continue to expand our businesses and operations internationally in the wake of numerous risks, including adverse currency fluctuations, difficulty in staffing and managing international operations, higher operating costs as a percentage of revenues, or the implementation of adverse regulations;
◦Maintain our financial position, operating results and cash flows in the event that we incur new or unanticipated costs or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added, and telecommunication taxes;
◦Manage certain risks related to the unauthorized use of our content and the infringement of our intellectual property rights by developers and users of generative artificial intelligence ("AI");
◦Prevent system failures, cybersecurity breaches, and other technological issues;
◦Achieve positive outcomes in our pending and future legal proceedings;
◦Accurately estimate the assumptions underlying our effective worldwide tax rate;
◦Maintain favorable relationships with critical third-party vendors that are financially stable;
◦Create compelling digital media content facilitating increased traffic and advertising levels and additional advertisers or an increase in advertising spend, and effectively target digital media advertisements to desired audiences;
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◦Manage certain risks inherent to our business, such as costs associated with fraudulent activity, system failure, or security breach; effectively maintaining and managing our billing systems; the time and resources required to manage our legal proceedings; liability for legal and other claims; our ability to consummate a sale of one or more of our business lines pursuant to our announced review of potential value-creating opportunities, or adhering to our internal controls and procedures;
◦Compete with other similar providers with regard to price, service, and functionality;
◦Achieve business and financial objectives in light of burdensome domestic and international telecommunications, internet, or other regulations, including regulations related to data privacy, access, security, retention, and sharing;
◦Successfully adapt to technological changes and diversify services and related revenues at acceptable levels of financial return;
◦Successfully develop and protect our intellectual property, both domestically and internationally, including our brands, content, copyrights, patents, trademarks, and domain names from infringement by third parties, and avoid infringing upon the proprietary rights of others;
◦Manage certain risks associated with environmental, social, and governance matters, including related reporting obligations, that could adversely affect our reputation and performance;
◦Recruit and retain key personnel and maintain the beneficial aspects of our corporate culture globally;
◦Meet any publicly announced guidance or other expectations about our business and future operating results; and
◦Avoid disruptions to our operations, financial position, and reputation as a result of the collapse of certain banks and potentially other financial institutions.
In addition, other factors that could cause actual results to differ materially from those anticipated in these forward-looking statements or materially impact our financial results include the risks associated with new accounting pronouncements, as well as those associated with natural disasters, public health crises, pandemics, and other catastrophic events outside of our control.
Overview
Ziff Davis, Inc. was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure. Ziff Davis, Inc., together with its subsidiaries ("Ziff Davis", "the Company", "our", "us" or "we"), is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, shopping, gaming and entertainment, health and wellness, cybersecurity, and martech. Our business specializes in the technology, shopping, gaming and entertainment, and healthcare markets, offering content, tools, and services to consumers and businesses and provides internet-delivered cloud-based services to consumers and businesses including cybersecurity, privacy, and marketing technology.
On June 17, 2026, the Company completed the sale of its Connectivity business ("Connectivity") to Accenture Inc. for an aggregate purchase price of $1.2 billion in cash, subject to certain customary adjustments set forth in the purchase agreement. During the first quarter of 2026, the Company determined that the Sale met the held-for-sale and discontinued operations accounting criteria. The assets and liabilities of Connectivity have been classified as discontinued operations for all periods presented in accordance with ASC 205-20, Discontinued Operations as the disposition constitutes a strategic shift that will have a major effect on the Company's operations and financial results. Furthermore, upon reclassification of Connectivity as discontinued operations, the Company determined that Connectivity is no longer a reportable segment. Refer to Note 5 - Divestitures in Item 1 of Part I of this Quarterly Report on Form 10-Q for further details.
Revenues Overview
The primary types of revenues that we generate are described below.
Advertising and Performance Marketing - We sell online display and video advertising on our owned-and-operated websites and applications and on third-party sites. We have contractual arrangements with advertisers either directly or through agencies. The terms of these contracts specify the price of the advertising to be sold and the volume of advertisements that will be served over the course of a campaign. Additionally, we have contractual arrangements with certain third-party websites and applications not owned by us, and third-party advertising networks to deliver online display and video advertising to their websites and applications or to third-party sites. We generate leads for advertisers, including vendors of consumer health and wellness products, consumer packaged goods, and information technology services, through various marketing methods. We also generate clicks to online merchants by listing products, deals, and discounts on our web properties, and earn a commission when customers "click-through" the ad to make a purchase.
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Subscription and Licensing - We provide cloud-based subscription services and generate "fixed" subscription revenues for customer subscriptions and, to a lesser extent, "variable" usage revenues generated from actual usage by our subscribers. We offer subscription and licensing services to businesses, including subscription packages to consumers through the Lose It! weight loss app and through Humble Bundle's digital subscriptions and storefront for video games, ebooks, and software. We also generate revenue from the sale of perpetual software licenses, related software support, and maintenance used in conjunction with software and other related services. We license our proprietary technology, and intellectual property to third parties for various purposes.
Other - Other revenues primarily include those from online courses and revenues from a customer acquisition platform for subscription services companies.
Revenues from external customers classified by revenue source are as follows (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Technology & Shopping | |||||||||||||||||||||||
| Advertising and performance marketing | $ | 73,098 | $ | 78,798 | $ | 141,461 | $ | 158,274 | |||||||||||||||
| Subscription and licensing | 3,593 | 2,626 | 6,389 | 4,804 | |||||||||||||||||||
| Other | 66 | (648) | 66 | (612) | |||||||||||||||||||
| Total Technology & Shopping revenues | $ | 76,757 | $ | 80,776 | $ | 147,916 | $ | 162,466 | |||||||||||||||
| Gaming & Entertainment | |||||||||||||||||||||||
| Advertising and performance marketing | $ | 29,167 | $ | 32,251 | $ | 54,823 | $ | 56,622 | |||||||||||||||
| Subscription and licensing | 16,265 | 13,965 | 31,373 | 27,611 | |||||||||||||||||||
| Other | 1,187 | 10 | 1,187 | 19 | |||||||||||||||||||
| Total Gaming & Entertainment revenues | $ | 46,619 | $ | 46,226 | $ | 87,383 | $ | 84,252 | |||||||||||||||
| Health & Wellness | |||||||||||||||||||||||
| Advertising and performance marketing | $ | 79,791 | $ | 82,537 | $ | 149,720 | $ | 151,462 | |||||||||||||||
| Subscription and licensing | 12,802 | 13,687 | 26,010 | 26,815 | |||||||||||||||||||
| Other | 2,065 | 3,228 | 4,878 | 6,961 | |||||||||||||||||||
| Total Health & Wellness revenues | $ | 94,658 | $ | 99,452 | $ | 180,608 | $ | 185,238 | |||||||||||||||
| Cybersecurity & Martech | |||||||||||||||||||||||
| Subscription and licensing | $ | 65,739 | $ | 68,349 | $ | 132,768 | $ | 135,663 | |||||||||||||||
| Other | 2,965 | - | 5,704 | - | |||||||||||||||||||
| Total Cybersecurity & Martech revenues | $ | 68,704 | $ | 68,349 | $ | 138,472 | $ | 135,663 | |||||||||||||||
| Total Revenues | $ | 286,738 | $ | 294,803 | $ | 554,379 | $ | 567,619 | |||||||||||||||
Performance Metrics
We use certain metrics to generally assess the operational and financial performance of our businesses. These metrics are described in further detail below and are used by management in managing or monitoring the performance of each reportable segment when the respective revenue category is significant to the revenues of the reportable segment overall. For advertising and performance marketing revenues, these metrics are used for the Technology & Shopping, Gaming & Entertainment, and Health & Wellness reportable segments. For subscription and licensing revenues, these metrics are used for the Gaming & Entertainment, Health & Wellness, and Cybersecurity & Martech reportable segments. Since all revenues are not reflected in these metrics, management does not use these metrics on a consolidated basis to evaluate performance, but rather uses them on a reportable segment basis as shown further below.
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Advertising and Performance Marketing - For our advertising and performance marketing revenues, management has identified net advertising and performance marketing revenue retention, the number of customers, and quarterly revenue per customer as relevant to investors' and others' assessment of our financial condition and results of operations. Net advertising and performance marketing revenue retention is an indicator of our ability to retain the spend of our existing advertisers year over year, which we view as a reflection of the effectiveness of our advertising and performance marketing platforms. Similarly, we monitor the number of our customers and the revenue per customer, as defined below, as these metrics provide further details related to our reported revenue and contribute to certain of our business planning decisions.
The following table sets forth certain key operating metrics for the advertising and performance marketing revenues based on the reportable segment for the three months ended June 30, 2026 and 2025.
| Three months ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Technology & Shopping | |||||||||||
|
Net advertising and performance marketing revenue retention (1)
|
90.0 | % | 95.0 | % | |||||||
|
Customers (2)
|
626 | 619 | |||||||||
|
Quarterly revenue per customer (3)
|
$ | 113,267 | $ | 127,299 | |||||||
| Gaming & Entertainment | |||||||||||
|
Net advertising and performance marketing revenue retention (1)
|
81.6 | % | 93.7 | % | |||||||
|
Customers (2)
|
486 | 431 | |||||||||
|
Quarterly revenue per customer (3)
|
$ | 60,015 | $ | 74,830 | |||||||
| Health & Wellness | |||||||||||
|
Net advertising and performance marketing revenue retention (1)
|
99.8 | % | 97.4 | % | |||||||
|
Customers (2)
|
797 | 866 | |||||||||
|
Quarterly revenue per customer (3)
|
$ | 99,046 | $ | 94,718 | |||||||
(1) Net advertising and performance marketing revenue retention equals (i) the trailing twelve months revenues recognized related to prior year customers in the current year period (excluding revenues from acquisitions during the stub period) divided by (ii) the trailing twelve months revenues recognized related to prior year customers in the prior year period (excluding revenues from acquisitions during the stub period). This excludes customers that generated less than $10,000 of revenues in the measurement period.
(2) Excludes customers that generated less than $2,500 in the quarter and those of certain newly acquired businesses.
(3) Represents total gross quarterly advertising and performance marketing revenues divided by customers as defined in footnote (2).
Subscription and Licensing - For our subscription and licensing revenues, management has identified the number of customers and average quarterly revenue per customer as relevant to investors' and others' assessment of our financial condition and results of operations. We believe that the number of customers that we serve is an indicator of our customer retention and growth. We believe the average quarterly revenue per customer provides insights that contribute to certain of our business planning decisions. Due to the nature of certain of the Company's services, changes in our customer base are expected and do not have significant financial implications for the Company as the Company generally does not have significant upfront customer acquisition costs for these customers.
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The following table sets forth certain key operating metrics for subscription and licensing revenues based on the reportable segment for the three months ended June 30, 2026 and 2025.
| Three months ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Gaming & Entertainment | |||||||||||
|
Customers (1)(2)
|
526,000 | 527,000 | |||||||||
|
Average quarterly revenue per customer (2)(3)
|
$30.94 | $26.47 | |||||||||
| Health & Wellness | |||||||||||
|
Customers (1)(2)
|
1,618,000 | 1,892,000 | |||||||||
|
Average quarterly revenue per customer (2)(3)
|
$7.92 | $7.17 | |||||||||
| Cybersecurity & Martech | |||||||||||
|
Customers (1)(4)
|
1,219,000 | 1,232,000 | |||||||||
|
Average quarterly revenue per customer (3)
|
$53.93 | $55.48 | |||||||||
(1) Represents the quarterly average of the end of month customer counts (rounded).
(2) The metric includes the sale of perpetual software licenses, when applicable, revenue for which is recorded at a point in time rather than over-time.
(3) Represents quarterly gross subscription and licensing revenues divided by customers as defined in footnote (1).
(4) Resellers within Cybersecurity & Martech segment are counted as one customer when there is not visibility into the number of underlying customers served by the reseller.
Critical Accounting Policies and Estimates
In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. Our critical accounting policies are described in our 2025 Annual Report on Form 10-K filed with the SEC on February 24, 2026. During the six months ended June 30, 2026, there were no significant changes in our critical accounting policies and estimates. See Note 1 - Basis of Presentation and Overview in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional description of significant accounting policies of the Company. As a result of certain developments in one reporting unit within the Health & Wellness reportable segment during the three and six months ended June 30, 2026, the Company performed a quantitative impairment test described further below.
Goodwill - The Company tests goodwill for impairment annually or more frequently if the Company believes indicators of impairment exist. The Company assessed current economic indicators, including changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, among others, to determine if there would be a significant decline to the fair value of a particular reporting unit.
During the three and six months ended June 30, 2026, the Company performed a quantitative fair value test on one reporting unit within the Health & Wellness reportable segment, following a period of declining results and reductions in forecasted revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA") in the reporting unit during the second quarter of 2026. Based on the quantitative fair value test, the carrying value exceeded its fair value, and the Company recorded an impairment of approximately $54.8 million during the three and six months ended June 30, 2026. In addition, following impairment at one reporting unit within the Cybersecurity & Martech reportable segment during the year ended December 31, 2025, there was no excess of fair value over the carrying value at that reporting unit. Thus, any further decrease in estimated fair value at these reporting units greater than any decrease in the carrying value at these reporting units will result in an additional impairment charge to goodwill. Goodwill at these two reporting units was $196.3 million as of June 30, 2026. There were no other reporting units with less than 10% excess fair value over carrying value as of the most recent evaluation that may be at risk of impairment as of June 30, 2026. Changes in market conditions, and key assumptions made in future quantitative assessments, including expected cash flows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge.
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In each period, the fair value of the reporting units was determined using an equal weighting of an income approach that was based on the discounted estimated future cash flows of the reporting unit and a market approach that uses the guideline public company approach. We believe the combination of these approaches provides an appropriate valuation because it incorporates the expected cash generation of the reporting unit in addition to how a third-party market participant would value the reporting unit. As the business is assumed to continue in perpetuity, the discounted future cash flows include a terminal value. Determining fair value using a discounted estimated future cash flow analysis requires the exercise of significant judgment with respect to several items, including the amount and timing of expected future cash flows and appropriate discount rates. The expected cash flows used in the discounted cash flow analyses were based on the most recent forecast for the reporting unit. For years beyond the forecast period, the estimates were based, in part, on forecasted growth rates. The discount rate the Company used represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in its reporting unit operations and the rate of return a market participant would expect to earn. Determining fair value using a market approach considers multiples of financial metrics based on trading multiples of a selected peer group of companies. From the comparable companies, a representative market multiple is determined, which is applied to financial metrics to estimate the fair value of the reporting unit.
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 the Financial Accounting Standards Board ("FASB") ASC Topic 360, Property, Plant, and Equipment, 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. During the three and six months ended June 30, 2026, the Company assessed the recoverability of certain of its assets in its Health & Wellness reportable segment following reductions in forecasted revenue and EBITDA in one of its asset groups and recorded an impairment of its internal-use-software of approximately $1.8 million within 'General, administrative, and other related costs' in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2026. The fair value of the internal-use-software was estimated using the multi-period excess earnings method under the income approach, which utilizes assumptions including projected future revenue generated from the asset, projected expenses, and discount rate.
Results of Operations for the Three and Six Months Ended June 30, 2026
The main focus of our Technology & Shopping, Gaming & Entertainment, and Health & Wellness platform monetization programs is to provide relevant and useful advertising to visitors to our websites, provide meaningful content that informs and shapes purchase intent, and leverage our brand and editorial assets into subscription platforms. As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and applications and those included within our advertising networks, and improve the effectiveness of our content as well as our subscription services and licenses. The operating margin we realize on revenues generated from ads placed on our websites and applications is significantly higher than the operating margin we realize from revenues generated from those placed on third-party websites and applications. Growth in advertising revenues from our websites and applications has generally exceeded that from third-party websites and applications. This trend has generally had a positive impact on our operating margins.
The main focus of our Cybersecurity & Martech service offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity, and security of our customers as the technologies and devices they use evolve over time. As a result, we expect to continue to take steps to enhance our existing offerings and offer new services to continue to satisfy the evolving needs of our customers.
We expect acquisitions to remain an important component of our strategy and use of capital across our Company; however, for a number of reasons, including macroeconomic conditions, in a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods. Moreover, future acquisitions of businesses with different business models may impact overall operating profit margins. From time to time, the Company may take steps to reduce investment in one or more of its business activities. In the past, we have divested certain businesses that we determined were no longer consistent with the Company's focus or that no longer aligned with the current or expected business performance of the Company's other businesses. The divestiture of the Connectivity business is intended to support our ongoing effort to maximize value for the Company's shareholders.
We are monitoring ongoing developments surrounding international trade and the macroeconomic environment. As a result of volatility in international trade and financial markets, we may experience direct and/or indirect effects on our business, operations, and financial results. Our past results may not be indicative of our future performance, and our financial results may differ materially from historical trends.
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Revenues
|
(in thousands, except percentages)
|
Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenues | $ | 286,738 | $ | 294,803 | (2.7)% | $ | 554,379 | $ | 567,619 | (2.3)% | |||||||||||||||||||||||||
Our revenues consist of revenues from (i) advertising and performance marketing revenues, which are earned from the delivery of advertising services, marketing, performance marketing, and production services, and (ii) subscription and licensing revenues, which are earned through the granting of access to, or delivery of, certain services to customers, usage-based fees, and by reselling various third-party solutions, primarily through the Company's email security line of business. Subscription and licensing revenues primarily consist of revenues from "fixed" customer subscription and licensing revenues and "variable" revenues generated from actual usage of our services.
Our revenues decreased during the three months ended June 30, 2026 compared to the prior period primarily due to an $11.5 million decrease in advertising and performance marketing revenues. This decrease was driven primarily by a $5.7 million decrease in the Technology & Shopping reportable segment, a $3.1 million decrease in the Gaming & Entertainment reportable segment, and a $2.7 million decrease in the Health & Wellness reportable segment. Subscription and licensing revenues decreased $0.2 million. Other revenues increased $3.7 million compared to the prior year period due primarily to a $3.0 million increase in the Cybersecurity & Martech reportable segment. Included in revenue during the three months ended June 30, 2026 were $7.1 million of incremental revenues contributed by businesses acquired during the first half of 2026 and the full year 2025.
Our revenues decreased during the six months ended June 30, 2026 compared to the prior period primarily due to a $20.4 million decrease in advertising and performance marketing revenues. This decrease was driven primarily by a $16.8 million decrease in the Technology & Shopping reportable segment, a $1.8 million decrease in the Gaming & Entertainment reportable segment and a $1.7 million decrease in the Health & Wellness reportable segment. Subscription and licensing revenues increased $1.6 million compared to the prior year period due primarily to a $3.8 million increase in our Gaming & Entertainment reportable segment, partially offset by a $2.9 million decrease in our Cybersecurity & Martech reportable segment. Other revenues increased $5.5 million compared to the prior year period due primarily to a $5.7 million increase in our Cybersecurity & Martech reportable segment. Included in revenue during the six months ended June 30, 2026 was $18.2 million of incremental revenues contributed by businesses acquired during the first half of 2026 and the full year 2025.
Direct costs
| (in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
|
Direct costs
|
$ | 45,711 | $ | 40,663 | 12.4% | $ | 90,028 | $ | 81,064 | 11.1% | |||||||||||||||||||||||||
|
As a percent of revenues
|
15.9 | % | 13.8 | % | 16.2 | % | 14.3 | % | |||||||||||||||||||||||||||
Direct costs represent the Company's cost of revenues and primarily include costs associated with compensation for personnel directly involved in revenue generation, content fees, production costs, royalty fees, hosting and licensing costs, and processing fees. The increase in direct costs for the three months ended June 30, 2026 compared to the prior period was primarily due to a $2.0 million increase in cloud computing, software, and other related expenses, a $1.0 million increase in campaign fulfillment costs related primarily to a business acquired in 2025, and a $0.7 million increase in salaries, benefits, and other employee expenses. The increase in direct costs for the six months ended June 30, 2026 compared to the prior period was primarily due to a $3.4 million increase in cloud computing, software, and other related expenses, a $2.1 million increase in campaign fulfillment costs related primarily to a business acquired in 2025, a $2.2 million increase in partner payments, and a $1.0 million increase in salaries, benefits, and other employee expenses.
Sales and Marketing
| (in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
|
Sales and marketing
|
$ | 122,172 | $ | 127,044 | (3.8)% | $ | 237,405 | $ | 239,455 | (0.9)% | |||||||||||||||||||||||||
|
As a percent of revenues
|
42.6 | % | 43.1 | % | 42.8 | % | 42.2 | % | |||||||||||||||||||||||||||
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Sales and marketing costs consist primarily of internet-based advertising, sales and marketing, personnel costs, and other business development-related expenses. Our internet-based advertising relationships consist primarily of fixed cost and performance-based (cost-per-impression, cost-per-click, and cost-per-acquisition) advertising relationships with an array of online service providers. The decrease in sales and marketing expenses during the three months ended June 30, 2026 compared to the prior period was primarily due to a $1.9 million decrease in professional and third-party services, a $1.4 million decrease in advertising and marketing related expenses, and a $0.9 million decrease in cloud computing, software, and other related expenses. The decrease in sales and marketing expenses for the six months ended June 30, 2026 compared to the prior period was primarily due to a $3.6 million decrease in professional and third-party services and a $2.7 million decrease in advertising and marketing related expenses, partially offset by a $4.4 million increase in salaries, benefits, and other employee expenses.
Research, Development, and Engineering
| (in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
|
Research, development, and engineering
|
$ | 14,369 | $ | 14,197 | 1.2% | $ | 28,006 | $ | 28,117 | (0.4)% | |||||||||||||||||||||||||
|
As a percent of revenues
|
5.0 | % | 4.8 | % | 5.1 | % | 5.0 | % | |||||||||||||||||||||||||||
Research, development, and engineering costs consist primarily of salaries, benefits, and other employee expenses. The increase in research, development, and engineering costs for the three months ended June 30, 2026, compared to the prior period was primarily due to a $0.7 million increase in professional and other third-party services, partially offset by a $0.6 million decrease in salaries, benefits, and other employee expenses. Research, development, and engineering costs for the six months ended June 30, 2026 compared to the prior period remained consistent.
General, Administrative, and Other Related Costs
| (in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
|
General, administrative, and other related costs
|
$ | 47,496 | $ | 48,794 | (2.7)% | $ | 94,140 | $ | 91,957 | 2.4% | |||||||||||||||||||||||||
|
As a percent of revenues
|
16.6 | % | 16.6 | % | 17.0 | % | 16.2 | % | |||||||||||||||||||||||||||
General, administrative, and other related costs consist primarily of salaries, benefits, and other employee expenses including share-based compensation and severance, changes in the fair value associated with contingent consideration, bad debt expense, professional fees, and insurance costs. The decrease in general, administrative, and other related costs for the three months ended June 30, 2026 compared to the prior period was primarily due to a $4.2 million decline in indirect tax expense driven by a reduction in certain reserves due to the expiration of certain statutes of limitations and a $0.8 million decrease in salaries, benefits, and other employee expenses, partially offset by a $2.7 million increase in professional and other third-party services and a $1.8 million long-lived asset impairment. The increase in general, administrative, and other related costs for the six months ended June 30, 2026 compared to the prior period was primarily due to a $5.4 million increase in professional and other third-party services and a $1.8 million long-lived asset impairment, partially offset by the $4.2 million decline in indirect tax expense and a $1.5 million decrease in salaries, benefits, and other employee expenses.
Depreciation and Amortization
| (in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
|
Depreciation and amortization
|
$ | 46,874 | $ | 50,335 | (6.9)% | $ | 91,752 | $ | 98,787 | (7.1)% | |||||||||||||||||||||||||
|
As a percent of revenues
|
16.3 | % | 17.1 | % | 16.6 | % | 17.4 | % | |||||||||||||||||||||||||||
Depreciation and amortization costs consist of depreciation related to property and equipment, including internally developed software, as well as amortization of intangible assets recorded in connection with business acquisitions, and other intangible assets of the Company. The decrease in depreciation and amortization for the three months ended June 30, 2026 compared to the prior period was primarily due to a $3.9 million decrease in amortization expense due to certain intangible assets being in run-off state and having a greater amortization expense earlier in life. The decrease in depreciation and amortization for the six months ended June 30, 2026 compared to the prior period was primarily due to an $8.1 million decrease in amortization expense due to certain intangible assets being in run-off state and having a greater amortization expense earlier in life.
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Goodwill Impairment
Goodwill impairment was $54.8 million for the three and six months ended June 30, 2026 and related to a reporting unit within the Health & Wellness reportable segment. Goodwill impairment was zero for the three and six months ended June 30, 2025. Refer to Note 7 - Goodwill and Intangible Assets in Part I Item 1 of this Quarterly Report on Form 10-Q.
Non-Operating Income and Expenses
The following table represents the components of non-operating income and expenses for the three and six months ended June 30, 2026 and 2025 (in thousands):
| Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Interest expense, net | $ | (5,770) | $ | (6,584) | (12.4) | % | $ | (12,666) | $ | (12,778) | (0.9) | % | |||||||||||||||||||||||
| Gain on investments, net | - | 4,340 | (100.0) | % | - | 4,340 | (100.0) | % | |||||||||||||||||||||||||||
| Other (loss) income, net | (586) | (2,402) | (75.6) | % | 102 | (3,877) | (102.6) | % | |||||||||||||||||||||||||||
|
Total non-operating expense
|
$ | (6,356) | $ | (4,646) | 36.8 | % | $ | (12,564) | $ | (12,315) | 2.0 | % | |||||||||||||||||||||||
Interest expense, net. Interest expense is generated primarily from interest due on outstanding debt, partially offset by interest income generated from interest earned on cash, cash equivalents, and investments. Interest expense, net decreased during the three months ended June 30, 2026 compared to the prior periods primarily due to higher interest income on investments as a result of an increase in cash equivalents as a result of the sale of Connectivity. Interest expense, net remained consistent during the six months ended June 30, 2026 compared to the prior period.
Gain (loss) on investments, net. Gain (loss) on investments, net is generated from realized and unrealized gains or losses from investments in equity and debt securities. Gain on investments, net recorded during the three and six months ended June 30, 2025 related to the disposition of the minority equity ownership interest in OpenEvidence (formerly known as Xyla).
Other income (loss), net. Other income (loss), net is generated primarily from miscellaneous items and gains or losses on foreign currency. The change in each period was primarily attributable to changes in gains or losses on foreign currency.
Income Taxes
The Company's effective tax rate is based on pre-tax income, statutory tax rates, tax regulations (including those related to transfer pricing), and different tax rates in the various jurisdictions in which we operate. The tax basis of our tax assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize. When necessary, we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized.
Provision for income taxes from continuing operations amounted to income tax expense of $0.9 million and income tax benefit of $0.1 million for the three months ended June 30, 2026 and 2025, respectively, and income tax expense of $3.6 million and $3.5 million for the six months ended June 30, 2026 and 2025, respectively. Our effective tax rate was (1.8)% and (0.8)% for the three months ended June 30, 2026 and 2025, respectively, and (6.6)% and 22.3% for the six months ended June 30, 2026 and 2025, respectively.
The effective tax rate of (1.8)% during the three months ended June 30, 2026 and the effective tax rate of (0.8%) during the three months ended June 30, 2025 were both disproportionately impacted by the following factors:
1.The second quarter of 2026 rate was impacted by the goodwill impairment since the impairment related to excess financial statement goodwill with no tax basis and no corresponding tax benefit was recognized; and
2. The second quarter of 2025 rate was impacted by a discrete tax benefit from the release of the valuation allowance against our U.S. capital loss carryforwards which resulted in a reduction of the effective income tax rate in the period.
In addition, the effective tax rate decreased in the second quarter of 2026 due to a larger benefit in 2026, as compared with the prior period, as a result of an increase in our foreign-derived deduction-eligible income ("FDDEI") deduction and simplified expense allocations due to changes under the OBBBA that were effective starting January 1, 2026.
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The decrease in our effective income tax rate to (6.6)% for the six months ended June 30, 2026 compared to 22.3% in the prior period was primarily attributable to the following:
1. The goodwill impairment recognized for book purposes during 2026 with no similar event in 2025. Since the impairment related to excess financial statement goodwill with no tax basis, no corresponding tax benefit was recognized resulting in a disproportionate effective income tax rate in 2026;
2. A discrete tax charge of $1.3 million in 2026 from remeasuring our deferred taxes due to a change in our expected state tax rates; and
3. The absence of a discrete tax benefit that occurred in 2025 due to a release of the valuation allowance against our U.S. capital loss carryforwards which resulted in a discrete tax benefit of $3.2 million recognized during 2025 with no similar event in 2026.
Judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis. We believe our tax positions, including intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business. Certain of these tax positions have in the past been, and are currently being, challenged, and this may have a significant impact on our effective tax rate if our tax reserves are insufficient.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law which, among other things, provided a permanent extension of certain tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025, and modified tax legislation affecting bonus depreciation rules and the tax treatment of research and development expenses and interest deductions. Specifically, the OBBBA provides for 100% bonus depreciation and eliminates the requirement under Internal Revenue Code Section 174 to capitalize and amortize U.S. based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred beginning after 2024. The Company currently does not expect the OBBBA to have a material impact on its effective tax rate but expects these provisions to result in a reduction of current income tax liabilities and an increase in deferred tax liabilities.
Equity Method Investment
(Loss) income from equity method investment, net of tax was primarily from the investment in the OCV Fund I, LP (the "OCV Fund") for which the Company receives annual audited financial statements. The investment in the OCV Fund is presented net of tax. The Company recognizes its share of net earnings or losses relating to the investment in the OCV Fund on a one-quarter lag due to the timing and availability of financial information from the OCV Fund. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.
Loss from equity method investment was $0.1 million, net of tax, for the three months ended June 30, 2026 compared to income from equity method investment of $5.1 million, net of tax, for the three months ended June 30, 2025. Income from equity method investment was $5.0 million, net of tax, for the six months ended June 30, 2026 compared to income from equity method investment of $11.7 million, net of tax, for the six months ended June 30, 2025. The decrease in income from equity method investment, net of tax during the three months ended June 30, 2026 compared to the prior period was primarily due to a decrease in the value of the underlying investments. The decrease in income from equity method investment, net of tax during the six months ended June 30, 2026 compared to the prior period was primarily due to a decrease in the value of the underlying investments.
Net (loss) income from continuing operations
Net loss from continuing operations was $52.2 million for the three months ended June 30, 2026 compared to net income from continuing operations of $14.3 million for the three months ended June 30, 2025. Net loss from continuing operations was $52.9 million for the six months ended June 30, 2026 compared to net income from continuing operations of $24.1 million for the six months ended June 30, 2025. The decrease in net income from continuing operations during the three and six months ended June 30, 2026 compared to the prior period was driven by the factors discussed above.
Net income from discontinued operations, net of tax
Net income from discontinued operations, net of tax was $676.6 million for the three months ended June 30, 2026 compared to net income from discontinued operations, net of tax of $12.0 million for the three months ended June 30, 2025. The increase in net income from discontinued operations was driven by the pre-tax gain on the sale of Connectivity of $860.6 million, partially offset by higher tax expense of $197.4 million due primarily to the tax impact of the gain on sale of $200.0 million recorded during the second quarter of 2026.
Net income from discontinued operations, net of tax was $699.7 million for the six months ended June 30, 2026 compared to net income from discontinued operations, net of tax of $26.5 million for the six months ended June 30, 2025. The
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increase in net income from discontinued operations, net of tax during the three months ended June 30, 2026 compared to the prior period was primarily due to the pre-tax gain on the sale of Connectivity of $860.6 million, partially offset by higher tax expense of $181.4 million. The higher tax expense was due to the $200.0 million tax impact of the gain on sale recorded during the second quarter of 2026, partially offset by an income tax benefit related primarily to deferred tax assets recorded during the first quarter of 2026 upon our classification of Connectivity as held-for-sale.
Net income
Net income was $624.5 million for the three months ended June 30, 2026 compared to net income of $26.3 million for the three months ended June 30, 2025. Net income was $646.7 million for the six months ended June 30, 2026 compared to net income of $50.6 million for the six months ended June 30, 2025. The increase in net income during the three and six months ended June 30, 2026 compared to the prior period was driven by the factors discussed above.
Segment Results
The Company's reportable segments are based on the organizational structure used by management for making operating and investment decisions and for assessing performance. The Company has four reportable segments: (i) Technology & Shopping, (ii) Gaming & Entertainment, (iii) Health & Wellness, and (iv) Cybersecurity & Martech. Reportable segment results presented below exclude inter-segment revenues and expenses.
Technology & Shopping
The financial results are presented as follows (in thousands):
| Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenues | $ | 76,757 | $ | 80,776 | (5.0) | % | $ | 147,916 | $ | 162,466 | (9.0) | % | |||||||||||||||||||||||
| Operating costs and expenses | 80,063 | 88,720 | (9.8) | % | 157,680 | 174,373 | (9.6) | % | |||||||||||||||||||||||||||
| Operating loss | $ | (3,306) | $ | (7,944) | (58.4) | % | $ | (9,764) | $ | (11,907) | (18.0) | % | |||||||||||||||||||||||
Technology & Shopping's revenues of $76.8 million during the three months ended June 30, 2026 decreased $4.0 million compared to the prior period primarily due to a $5.7 million decrease in advertising and performance marketing revenues, primarily driven by $4.1 million and $3.4 million decreases in advertising and performance marketing revenues in our Technology businesses and our Shopping businesses, respectively, partially offset by a $1.0 million increase in subscription and licensing revenues and a $0.7 million increase in other revenues. The decline in revenues during the quarter was driven by traffic pressures impacting affiliate commerce and programmatic display advertising.
Technology & Shopping's revenues of $147.9 million during the six months ended June 30, 2026 decreased $14.6 million compared to the prior period primarily due to a $16.8 million decrease in advertising and performance marketing revenues, primarily driven by $11.4 million and $7.2 million decreases in advertising and performance marketing revenues in our Technology businesses and our Shopping businesses, respectively, partially offset by a $1.6 million increase in subscription and licensing revenues and a $0.7 million increase in other revenues. The decline in revenues during the period was driven by traffic pressures impacting affiliate commerce and programmatic display advertising.
Technology & Shopping's operating costs and expenses of $80.1 million during the three months ended June 30, 2026 decreased $8.7 million compared to the prior period primarily driven by a $2.5 million decrease in depreciation and amortization expenses, a $2.3 million decrease in salaries, benefits, and other employee expenses, a $2.2 million decrease in professional and other third-party services, and a $1.9 million decrease in advertising and performance marketing related expenses.
Technology & Shopping's operating costs and expenses of $157.7 million during the six months ended June 30, 2026 decreased $16.7 million compared to the prior period primarily driven by a $4.4 million decrease in professional and other third-party services, a $4.3 million decrease in advertising and performance marketing related expenses, a $4.3 million decrease in depreciation and amortization expenses, and a $4.3 million decrease in salaries, benefits, and other employee expenses.
As a result of these factors, Technology & Shopping's operating loss of $3.3 million during the three months ended June 30, 2026 decreased $4.6 million compared to the prior period. Technology & Shopping's operating loss of $9.8 million during the six months ended June 30, 2026 decreased $2.1 million compared to the prior period.
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Gaming & Entertainment
The financial results are presented as follows (in thousands):
| Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenues | $ | 46,619 | $ | 46,226 | 0.9 | % | $ | 87,383 | $ | 84,252 | 3.7 | % | |||||||||||||||||||||||
| Operating costs and expenses | 37,602 | 34,971 | 7.5 | % | 70,482 | 64,223 | 9.7 | % | |||||||||||||||||||||||||||
| Operating income | $ | 9,017 | $ | 11,255 | (19.9) | % | $ | 16,901 | $ | 20,029 | (15.6) | % | |||||||||||||||||||||||
Gaming & Entertainment's revenues of $46.6 million during the three months ended June 30, 2026 increased $0.4 million compared to the prior period primarily due to a $2.3 million increase in subscription and licensing revenues driven by our Humble Bundle business and a $1.2 million increase in other revenue, partially offset by a decrease of $3.1 million in advertising and performance marketing revenues.
Gaming & Entertainment's revenues of $87.4 million during the six months ended June 30, 2026 increased $3.1 million compared to the prior period primarily due to a $3.8 million increase in subscription and licensing revenues driven by our Humble Bundle business and a $1.2 million increase in other revenue, partially offset by a decrease of $1.8 million in advertising and performance marketing revenues.
Gaming & Entertainment's operating costs and expenses of $37.6 million during the three months ended June 30, 2026 increased $2.6 million compared to the prior period primarily due to a $0.8 million increase in professional and other third-party services and a $0.7 million increase in advertising and marketing related expenses.
Gaming & Entertainment's operating costs and expenses of $70.5 million during the six months ended June 30, 2026 increased $6.3 million compared to the prior period primarily due to a $1.7 million increase in professional and other third-party services, a $1.4 million increase in partner payments, and a $0.8 million increase in advertising and marketing related expenses.
As a result of these factors, Gaming & Entertainment's operating income of $9.0 million during the three months ended June 30, 2026 decreased $2.2 million compared to the prior period. Gaming & Entertainment's operating income of $16.9 million during the six months ended June 30, 2026 decreased $3.1 million compared to the prior period.
Health & Wellness
The financial results are presented as follows (in thousands):
| Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenues | $ | 94,658 | $ | 99,452 | (4.8) | % | $ | 180,608 | $ | 185,238 | (2.5) | % | |||||||||||||||||||||||
| Operating costs and expenses | 136,949 | 83,434 | 64.1 | % | 214,275 | 152,258 | 40.7 | % | |||||||||||||||||||||||||||
| Operating (loss) income | $ | (42,291) | $ | 16,018 | (364.0) | % | $ | (33,667) | $ | 32,980 | (202.1) | % | |||||||||||||||||||||||
Health & Wellness's revenues of $94.7 million during the three months ended June 30, 2026 decreased $4.8 million compared to the prior period primarily due to a $2.7 million decrease in advertising and performance marketing revenues, primarily driven by a decrease in the Health & Wellness Professional lines of business. In addition, other revenues decreased by $1.2 million driven by lower online course revenue and a decrease in subscription and licensing revenues of $0.9 million.
Health & Wellness's revenues of $180.6 million during the six months ended June 30, 2026 decreased $4.6 million compared to the prior period primarily due to a decline of $2.1 million in other revenue driven by lower online course revenue and a decrease of $1.7 million in advertising and performance marketing revenues and a decline of $0.8 million in subscription and licensing revenues.
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Health & Wellness's operating costs and expenses of $136.9 million during the three months ended June 30, 2026 increased $53.5 million compared to the prior period primarily due to a $54.8 million goodwill impairment.
Health & Wellness's operating costs and expenses of $214.3 million during the six months ended June 30, 2026 increased $62.0 million compared to the prior period primarily due to a $54.8 million goodwill impairment and an increase of $4.1 million in salaries, benefits, and other employee expenses.
As a result of these factors, Health & Wellness had an operating loss of $42.3 million during the three months ended June 30, 2026 compared to operating income of $16.0 million in the prior period. Health & Wellness had an operating loss of $33.7 million during the six months ended June 30, 2026 compared to operating income of $33.0 million in the prior period.
Cybersecurity & Martech
The financial results are presented as follows (in thousands):
| Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenues | $ | 68,704 | $ | 68,349 | 0.5 | % | $ | 138,472 | $ | 135,663 | 2.1 | % | |||||||||||||||||||||||
| Operating costs and expenses | 55,326 | 56,114 | (1.4) | % | 111,397 | 112,105 | (0.6) | % | |||||||||||||||||||||||||||
| Operating income | $ | 13,378 | $ | 12,235 | 9.3 | % | $ | 27,075 | $ | 23,558 | 14.9 | % | |||||||||||||||||||||||
Cybersecurity & Martech's revenues of $68.7 million during the three months ended June 30, 2026 increased $0.4 million compared to the prior period primarily due to a $3.0 million increase in other revenues related to a business acquired in 2025 within the Company's Martech business, partially offset by a $2.6 million decrease in subscription and licensing revenues.
Cybersecurity & Martech's revenues of $138.5 million during the six months ended June 30, 2026 increased $2.8 million compared to the prior period primarily due to a $5.7 million increase in other revenues related to a business acquired in 2025 within the Company's Martech business, partially offset by a $2.9 million decrease in subscription and licensing revenues.
Cybersecurity & Martech's operating costs and expenses of $55.3 million during the three months ended June 30, 2026 decreased $0.8 million due primarily to a decline in indirect tax expense of $4.3 million driven by a reduction in certain reserves due to the expiration of certain statutes of limitations, partially offset by a $1.8 million increase in salaries, benefits, and other employee expenses, and a $1.3 million increase in campaign fulfillment costs.
Cybersecurity & Martech's operating costs and expenses of $111.4 million during the six months ended June 30, 2026 decreased $0.7 million primarily due to a decline in indirect tax expense of $4.3 million driven by a reduction in certain reserves due to the expiration of certain statutes of limitations and a $3.8 million decrease in depreciation and amortization, partially offset by an increase of $2.8 million in campaign fulfillment costs, an increase of $2.6 million in salaries, benefits, and other employee expenses, and an increase of $1.8 million in cloud computing, software, and other related expenses.
As a result of these factors, Cybersecurity & Martech's operating income of $13.4 million during the three months ended June 30, 2026 increased $1.1 million compared to the prior period. Cybersecurity & Martech's operating income of $27.1 million during the six months ended June 30, 2026 increased $3.5 million compared to the prior period.
Liquidity and Capital Resources
Our primary sources of liquidity and capital resources are cash and cash equivalents, cash flows from operations and debt financing. We continue to invest in the development and expansion of our operations using available cash flows from operations. Ongoing investments include, but are not limited to, improvements in our offerings, investments in new products and services, and acquisitions. We also use cash and cash equivalents and cash flows from operations to service our debt obligations, meet our tax obligations, including those associated with the gain on the sale of Connectivity, and repurchase our shares.
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Cash and Cash Equivalents
As of June 30, 2026 and December 31, 2025, our cash and cash equivalents were $1,606.1 million and $573.8 million, respectively.
Cash and cash equivalents held within domestic and foreign jurisdictions were as follows (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Cash and cash equivalents held in domestic jurisdiction | $ | 1,490,603 | $ | 481,021 | |||||||
| Cash and cash equivalents held in foreign jurisdiction | 115,509 | 92,756 | |||||||||
| Cash and cash equivalents | $ | 1,606,112 | $ | 573,777 | |||||||
Financings
On June 18, 2024, the Company entered into a New Lender Joinder Agreement and Eighth Amendment (the "Joinder and Amendment") to the Credit Agreement. The Joinder and Amendment provides for, among other things, (i) an increase in the Aggregate Revolving Loan Commitment by an aggregate principal amount of $250.0 million for a total of $350.0 million, (ii) an extension of the scheduled maturity date from April 7, 2026 to the earlier of (x) June 18, 2027 or (y) under certain limited circumstances that did not occur, August 2, 2026, (iii) a "credit spread adjustment" for SOFR-based borrowings of 0.10% across all interest periods, (iv) the inclusion of limited conditionality borrowing mechanics with respect to certain borrowings, and (v) certain other related amendments.
As of June 30, 2026 and December 31, 2025, availability under the Credit Agreement was $348.9 million and $348.8 million, respectively, net of letters of credit.
On July 16, 2024, the Company issued $263.1 million in aggregate principal amount of new 3.625% Convertible Notes due 2028 (the "3.625% Convertible Notes") and paid an aggregate of approximately $135.0 million in cash in exchange for approximately $400.9 million in aggregate principal amount of the Company's 1.75% Convertible Notes (collectively, the "Exchange Transaction") pursuant to separate, privately negotiated exchange agreements with certain holders of the 1.75% Convertible Notes. The 3.625% Convertible Notes bear interest at a rate of 3.625% per annum on the principal amount thereof, payable semi-annually in arrears on September 1 and March 1 of each year, beginning on March 1, 2025, to the noteholders of record of the 3.625% Convertible Notes as of the close of business on the immediately preceding August 15 and February 15, respectively. The 3.625% Convertible Notes will mature on March 1, 2028, unless earlier converted or repurchased. The 3.625% Convertible Notes can be settled in cash, the Company's common stock at an initial conversion rate of $100 per share, or a combination of cash and the Company's common stock, at the Company's election. See Note 8 - Debt in Part I Item 1 of this Quarterly Report on Form 10-Q for further details.
Material Cash Requirements
Ziff Davis' long-term contractual obligations generally include its long-term debt, including its current portion, as described above, interest on long-term debt, lease payments on its property and equipment, and holdback amounts in connection with certain business acquisitions. These long-term contractual obligations extend through 2036. Refer to Note 8 - Debt and Note 3 - Acquisitions in Part I Item 1 of this Quarterly Report on Form 10-Q.
As of June 30, 2026, we and our subsidiaries had outstanding $872.3 million in aggregate principal amount of indebtedness. As of June 30, 2026, our total future minimum lease payments were $26.9 million of which approximately $7.1 million future minimum lease payments are due in the succeeding twelve months. As of June 30, 2026, our liability for uncertain tax positions was $19.6 million. In the ordinary course of business, the Company enters into commitments including those related to cloud computing, information technology, security, and information and document management. The Company also has revenue sharing arrangements with annual minimum guarantees based upon third-party website advertising metrics and other contractual provisions.
We currently anticipate that our existing cash and cash equivalents, cash generated from operations, and availability under our revolving credit facility, will be sufficient to meet our anticipated needs for working capital, capital expenditures, principal payments on our indebtedness, and share repurchases, if any, for at least the next 12 months.
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Cash Flows
The following table provides a summary of cash flows from operating, investing, and financing activities from continuing and discontinued operations (in thousands):
| Six months ended June 30, | Change | ||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| Net cash provided by operating activities | $ | 118,916 | $ | 77,687 | $ | 41,229 | |||||||||||
| Net cash provided by (used in) investing activities | $ | 1,057,716 | $ | (71,600) | $ | 1,129,316 | |||||||||||
| Net cash used in financing activities | $ | (173,784) | $ | (66,888) | $ | (106,896) | |||||||||||
Operating Activities
Our net cash provided by operating activities resulted primarily from cash received from our customers offset by cash payments we made to third parties for their services, employee compensation, interest payments associated with our debt, and taxes. The $41.2 million increase in net cash provided by operating activities during the six months ended June 30, 2026 compared to the prior period was primarily related to increased collections from our customers. The increase in net cash provided by operating activities includes the activities of TDS Gift Cards, which had a negative impact of $78.1 million and $86.6 million during the first six months of 2026 and the first six months of 2025, respectively.
Investing Activities
The $1,129.3 million increase in net cash provided in investing activities during the six months ended June 30, 2026 compared to the prior period was primarily related to cash received at closing of the Connectivity sale of $1,134.1 million, net of cash divested.
Financing Activities
The $106.9 million increase in net cash used in financing activities during the six months ended June 30, 2026 compared to the prior period was primarily related to a larger amount of cash used for share repurchases.
Stock Repurchase Program
On August 6, 2020, our Board of Directors (the "Board") approved a program authorizing the repurchase of up to ten million shares of our common stock through August 6, 2025 (the "2020 Program"). On August 2, 2024, the Board authorized (i) an increase in its 2020 Program pursuant to which the Company may purchase up to an additional five million shares of the Company's common stock (the "Additional Authorization") and (ii) an extension of the expiration date of the share repurchase program from August 6, 2025 to August 2, 2029. As a result of the Additional Authorization, the aggregate number of shares of the Company's common stock under the 2020 Program increased from up to ten million shares to up to 15 million shares of the Company's common stock. In connection with the authorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the repurchase program.
On February 22, 2026, the Board of the Company authorized (i) an increase in its 2020 Program pursuant to which the Company may purchase up to an additional ten million shares of the Company's common stock and (ii) an extension of the expiration date of the share repurchase program from August 2, 2029 to February 22, 2036 ("Amended Stock Repurchase Program"). As a result of the Amended Stock Repurchase Program, the aggregate number of shares of the Company's common stock under the 2020 Program increased from up to 15 million shares to up to 25 million shares of the Company's common stock.
A summary of share repurchases under the 2020 Program during the six months ended June 30, 2026 is as follows (in thousands, except share amounts):
| Total number of shares repurchased |
Aggregate purchase price (1)
|
Shares remaining under repurchase authorization as of June 30, 2026
|
||||||||||||
| 3,813,873 | $168,617 | 7,669,154 | ||||||||||||
(1)Includes the impact of excise taxes.
Cumulatively as of June 30, 2026, 17,330,846 shares have been repurchased under the 2020 Program, at an aggregate cost of $923.9 million (including excise tax). These shares were subsequently retired. Refer to Note 11 - Stockholders' Equity in Item 1 of Part I of this Quarterly Report on Form 10-Q for further details.
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