Ziff Davis, Inc.: Form 10-Q for the period ended Sep 30, 2025

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 on which such statements are based. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements 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, 2024 (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 businesses 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;
• Continue to expand our businesses and operations internationally in the wake of numerous risks, including adverse currency fluctuations, difficulty in staffing and managing international operations, higher operating costs as a percentage of revenues, or the implementation of adverse regulations;
• Maintain our financial position, operating results and cash flows in the event that we incur new or unanticipated costs or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added, and telecommunication taxes;
• Manage certain risks related to the unauthorized use of our content and the infringement of our intellectual property rights by developers and users of generative artificial intelligence (“AI”);
• Prevent system failures, security breaches, and other technological issues;
• 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;
• 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 governmental matters, including related reporting obligations, that could adversely affect our reputation and performance;
• Recruit and retain key personnel and maintain the beneficial aspects of our corporate culture globally;
• Meet our publicly announced guidance or other expectations about our business and future operating results; and
• Avoid disruptions to our operations, financial position, and reputation as a result of the collapse of certain banks and potentially other financial institutions.

In addition, other factors that could cause actual results to differ materially from those anticipated in these forward-looking statements or materially impact our financial results 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, connectivity, cybersecurity, and martech. Our business specializes in the technology, shopping, gaming and entertainment, healthcare, and connectivity 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.

Segments

As described in our Annual Report on Form 10-K for the year ended December 31, 2024, the Company has five operating segments which are now presented as the following five reportable segments: 1) Technology & Shopping, 2) Gaming & Entertainment, 3) Health & Wellness, 4) Connectivity, and 5) Cybersecurity & Martech. Prior period segment information is presented on a comparable basis to conform to this new segment presentation with no effect on previously reported consolidated results. Refer to Note 13 — Segment Information for additional detail.

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.

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, which offer up-to-date insights into global fixed broadband and mobile performance data, and we offer 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, data, and intellectual property to third parties for various purposes.

Other - Other revenues primarily include those from the sale of hardware used in conjunction with software, online course revenues, and game publishing revenues, and revenues from a customer acquisition platform for subscription services companies.

Revenues from external customers classified by revenue source are as follows (in thousands):

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 revenues 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, Connectivity, 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.

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 September 30, 2025 and 2024.

(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.

(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 monthly revenue per customer provides insights that contribute to certain of our business planning decisions. Beginning in the first quarter of 2025, management no longer uses Subscription and Licensing churn rate in its assessment of broad performance of each reportable segment. Management no longer analyzes churn rate broadly because it believes that the number of total customers is a more meaningful reportable segment level metric due to the impact of expiring licenses on the metric. Additionally, 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 to the Company as the Company generally does not have significant upfront customer acquisition costs for these customers.

The following table sets forth certain key operating metrics for subscription and licensing revenues based on the reportable segment for the three months ended September 30, 2025 and 2024.

(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 2024 Annual Report on Form 10-K filed with the SEC on February 25, 2025. During the nine months ended September 30, 2025, 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.

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 nine months ended September 30, 2025, the Company performed quantitative fair value tests of all of its reporting units following a sustained decline in the Company’s stock price. Based on the quantitative fair value tests, the carrying value of one reporting unit within the Cybersecurity & Martech reportable segment exceeded its fair value, and the Company recorded an impairment of approximately $17.6 million during the three and nine months ended September 30, 2025. Following the impairment at one reporting unit within the Cybersecurity & Martech reportable segment, there was no excess fair value over carrying value at that reporting unit. Goodwill at this reporting unit was $177.7 million as of September 30, 2025. 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 September 30, 2025. 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.

During the three and nine months ended September 30, 2024, the Company reassessed the fair value of certain reporting units within the Technology & Shopping, Health & Wellness, and Cybersecurity & Martech reportable segments following a sustained decline in the Company’s stock price, and forecasted reductions in revenue or EBITDA in those reporting units. Based on the quantitative fair value test of two reporting units within the Technology & Shopping reportable segment, the carrying value of the reporting units exceeded their fair value, and the Company recorded an impairment of approximately $85.3 million during the three and nine months ended September 30, 2024.

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. Refer to Note 6 — Goodwill and Intangible Assets in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details.

Results of Operations for the Three and Nine Months Ended September 30, 2025

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 Connectivity segment is to collect and correlate the information on internet connectivity, network performance, and consumer experiences, while providing insights and software relating to broadband networks. 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 global customers.

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.

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.

Revenues

(in thousands, except percentages)

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 data products or 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 increased during the three months ended September 30, 2025 compared to the prior period primarily due to a $11.5 million increase in advertising and performance marketing revenues. This increase was driven primarily by a $10.5 million increase in our Health & Wellness reportable segment and a $3.7 million increase in our Technology & Shopping reportable segment, partially offset by a $3.0 million decrease in Gaming & Entertainment reportable segment. Subscription and licensing revenues increased $3.0 million compared to the prior year period due primarily to a $1.2 million increase in our Technology & Shopping reportable segment. Other revenues decreased $4.3 million compared to the prior year period due primarily to a $6.9 million decrease in our Technology & Shopping reportable segment, partially offset by a $2.3 million increase in our Cybersecurity & Martech reportable segment.

Our revenues increased during the nine months ended September 30, 2025 compared to the prior period primarily due to a $57.1 million increase in advertising and performance marketing revenues. This increase was driven primarily by a $27.2 million increase in our Health & Wellness reportable segment and a $26.9 million increase in our Technology & Shopping reportable segment. Subscription and licensing revenues increased $7.1 million compared to the prior year period due primarily to a $10.6 million increase in our Connectivity reportable segment, a $4.0 million increase in our Health & Wellness reportable segment, a $2.4 million increase in our Technology & Shopping reportable segment, partially offset by a $9.7 million decrease in our Cybersecurity & Martech reportable segment. Other revenues decreased $8.6 million compared to the prior year period due primarily to a $10.6 million decrease in our Technology & Shopping reportable segment, partially offset by a $2.3 million increase in our Cybersecurity & Martech reportable segment.

Direct costs

(in thousands, except percentages)

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 September 30, 2025 compared to the prior period was primarily due to a $1.9 million increase in cloud computing, software, and other related expenses. The increase in direct costs for the nine months ended September 30, 2025 compared to the prior period was primarily due to a $1.9 million increase in cloud computing, software, and other related expenses, as well as $1.7 million increase in professional and third-party services, partially offset by a $1.6 million decrease in advertising and marketing related expenses.

Sales and Marketing

(in thousands, except percentages)

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 increase in sales and marketing expenses during the three months ended September 30, 2025 compared to the prior period was primarily due to a $4.5 million increase in salaries, benefits, and other employee expenses as a result of current and prior year acquisitions, a $2.4 million increase in professional and third-party services as a result of a current year acquisition, a $1.3 million increase in advertising and marketing related expenses, and a $1.3 million increase in partner payments. The increase in sales and marketing expenses during the nine months ended September 30, 2025 compared to the prior period was primarily due to a $16.4 million increase in salaries, benefits, and other employee expenses as a result of current and prior year acquisitions, a $9.0 million increase in professional and third-party services as a result of a current year acquisition, a $7.5 million increase in partner payments, and a $4.1 million increase in advertising and marketing related expenses.

Research, Development, and Engineering

(in thousands, except percentages)

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 September 30, 2025, compared to the prior period was primarily due to a $1.2 million increase in cloud computing, software, and other related expenses, partially offset by a $0.9 million decrease in a professional and other third-party services. The decrease in research, development, and engineering costs for the nine months ended September 30, 2025, compared to the prior period was primarily due to a $3.7 million decrease in salaries, benefits, and other employee expenses and a $1.9 million decrease in professional and other third-party services, partially offset by a $3.6 million increase in cloud computing, software, and other related expenses.

General, Administrative, and Other Related Costs

(in thousands, except percentages)

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 increase in general, administrative, and other related costs for the three months ended September 30, 2025 compared to the prior period was primarily due to a $2.3 million increase in professional and other third-party services, partially offset by a $0.9 million decrease in other expenses. The increase in general, administrative, and other related costs for the nine months ended September 30, 2025 compared to the prior period was primarily due to a $3.4 million increase in professional and other third-party services and a $1.9 million increase in cloud computing, software, and other related expenses, partially offset by a $1.2 million decrease in salaries, benefits, and other employee expenses.

Depreciation and Amortization

(in thousands, except percentages)

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 increase in depreciation and amortization for the three months ended September 30, 2025 compared to the prior period was primarily due to an increase of $3.7 million in depreciation expense as capitalized software was placed in service and an increase of $2.7 million in amortization expense primarily as a result of new intangible assets acquired during 2024 in business combinations. The increase in depreciation and amortization for the nine months ended September 30, 2025 compared to the prior period was primarily due to an increase of $11.3 million in depreciation expense as capitalized software was placed in service and an increase of $7.9 million in amortization expense primarily as a result of new intangible assets acquired during 2024 in business combinations.

Goodwill Impairment

Goodwill impairment was $17.6 million for the three and nine months ended September 30, 2025, respectively, and related to a reporting unit within the Cybersecurity & Martech reportable segment. Goodwill impairment was $85.3 million for the three and nine months ended September 30, 2024, respectively, and related to reporting units within the Technology & Shopping reportable segment. Refer to Note 6 — Goodwill and Intangible Assets in Part I Item 1 of this Quarterly Report on Form 10-Q for further details.

Non-Operating Income and Expenses

The following table represents the components of non-operating income and expenses for the three and nine months ended September 30, 2025 and 2024 (in thousands):

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 increased during the three and nine months ended September 30, 2025 compared to the prior periods primarily due to lower interest income on investments as a result of a decline in cash equivalents and a reduction in rate.

Loss on sale of businesses. Loss on sale of businesses during the nine months ended September 30, 2024 represents the loss on disposal of an international business in the Technology & Shopping reportable segment.

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 months ended September 30, 2025 related to the sale of an immaterial equity method investment. Gain on investments, net recorded during the nine months ended September 30, 2025 primarily related to the disposition of the minority equity ownership interest in OpenEvidence (formerly known as Xyla). Gain (loss) on investments, net recorded during the three and nine months ended September 30, 2024 related to the change in the fair value of our investment in Consensus common stock prior to the disposition of the investment and the results of the disposition of the Consensus common stock during the second quarter of 2024.

Provision for credit losses on investments. Provision for credit losses on investments during the three and nine months ended September 30, 2025 was generated from a provision for credit losses on the investment in corporate debt security, including accrued interest receivable.

Other income (loss), net. Other income (loss), net is generated primarily from miscellaneous items and gains or losses on foreign currency. The change was primarily attributable to changes in gains or losses on foreign currency.

Income Taxes

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

Provision for income taxes amounted to income tax expense of $12.8 million and $(12.5) million for the three months ended September 30, 2025 and 2024, respectively, and $25.7 million and $(27.8) million for the nine months ended September 30, 2025 and 2024, respectively. Our effective tax rate was 139.8% and (34.9)% for the three months ended September 30, 2025 and 2024, respectively, and 42.2% and 149.0% for the nine months ended September 30, 2025 and 2024, respectively.

The increase in our effective income tax rate for the three months ended September 30, 2025 compared to the prior period was primarily attributable to the following:

1. $17.6 million goodwill impairment recognized for book purposes during 2025 as compared to $85.3 million in 2024. Since the impairment related to excess financial statement goodwill with no tax basis, no corresponding tax benefits were recognized resulting in a disproportionate effective income tax rate for both years;

2. an increase in our effective income tax rate due to a recognition of a valuation allowance related to a credit loss recognized on the investment in available-for-sale corporate debt security resulting in a discrete charge of $3.8 million.

The decrease in our effective income tax rate for the nine months ended September 30, 2025 compared to the prior period was primarily attributable to the following:

1. $17.6 million goodwill impairment recognized for book purposes during 2025 as compared to $85.3 million in 2024. Since the impairment related to excess financial statement goodwill with no tax basis, no corresponding tax benefits were recognized resulting in a disproportionate effective income tax rate for both years;

2. a change in the valuation allowance against U.S. capital loss, which resulted in a net $0.5 million discrete tax expense recognized during the 2025 period as compared to a discrete tax expense of $2.5 million recognized during 2024; partially offset by

3. an increase in the discrete tax charge related to the vesting of share-based compensation resulting in a $1.2 million greater tax shortfall period over period.

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, which could be material. The Company will continue to assess the implications of the OBBBA and will provide further disclosures in subsequent reporting periods, as necessary.

Equity Method Investment

Income (loss) from equity method investment, net of tax. Income from equity method investment 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.

Income from equity method investment was less than $0.1 million, net of income tax, for the three months ended September 30, 2025 compared to loss from equity method investment of $0.1 million, net of income tax, for the three months ended September 30, 2024. Income from equity method investment was $11.8 million, net of income tax, for the nine months ended September 30, 2025 compared to income from equity method investment of $8.1 million, net of income tax, for the nine months ended September 30, 2024. The increase in income from equity method investment, net during the three months ended September 30, 2025 compared to the prior period was primarily due to an increase in the value of the underlying investment. The increase in income from equity method investment, net during the nine months ended September 30, 2025 compared to the prior period was primarily due to a greater increase in the value of the underlying investment.

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 five reportable segments: (i) Technology & Shopping, (ii) Gaming & Entertainment, (iii) Health & Wellness, (iv) Connectivity, and (v) Cybersecurity & Martech. Reportable segment results presented below exclude inter-segment revenues and expenses.

Technology & Shopping

The financial results are presented as follows (in thousands):

Technology & Shopping’s revenues of $85.2 million during the three months ended September 30, 2025 decreased $1.9 million compared to the prior period primarily due to a $6.9 million decline in other revenues driven by a decline in game publishing revenues, partially offset by a $3.7 million increase in advertising and performance marketing revenues, primarily driven by an increase in the Technology business as a result of an acquisition in 2024, and a $1.2 million increase in subscription and licensing revenues.

Technology & Shopping’s revenues of $247.7 million during the nine months ended September 30, 2025 increased $18.7 million compared to the prior period primarily due to a $26.9 million increase in advertising and performance marketing revenues, primarily driven by an increase in the Technology business as a result of an acquisition in 2024, and a $2.4 million increase in subscription and licensing revenues, partially offset by a decline of $10.6 million in other revenues driven by a decline in game publishing revenues.

Technology & Shopping’s operating costs and expenses of $85.1 million during the three months ended September 30, 2025 decreased $80.6 million compared to the prior period primarily driven by a $85.3 million goodwill impairment recognized during the three months ended September 30, 2024, which did not recur in 2025 period, partially offset by $2.3 million increase in depreciation and amortization.

Technology & Shopping’s operating costs and expenses of $259.5 million during the nine months ended September 30, 2025 decreased $62.8 million compared to the prior period primarily driven by a $85.3 million goodwill impairment recognized during the nine months ended September 30, 2024, which did not recur in 2025 period, partially offset by a $9.9 million increase in depreciation and amortization driven by acquisitions during 2024, and a $9.2 million increase in salaries, benefits, and other employee expenses.

As a result of these factors, Technology & Shopping’s operating income of less than $0.1 million during the three months ended September 30, 2025 decreased $78.7 million compared to the prior period. Technology & Shopping’s operating loss of $11.9 million during the nine months ended September 30, 2025 decreased $81.5 million compared to the prior period.

Gaming & Entertainment

The financial results are presented as follows (in thousands):

Gaming & Entertainment’s revenues of $47.6 million during the three months ended September 30, 2025 decreased $2.1 million compared to the prior period primarily due to a $3.0 million decrease in advertising and performance marketing revenues, partially offset by a $0.9 million increase in subscription and licensing revenues.

Gaming & Entertainment’s revenues of $131.8 million during the nine months ended September 30, 2025 increased $2.5 million compared to the prior period primarily due to a $2.7 million increase in advertising and performance marketing revenues, partially offset by a decrease of $0.2 million in subscription and licensing revenues.

Gaming & Entertainment’s operating costs and expenses of $32.9 million during the three months ended September 30, 2025 decreased $1.8 million compared to the prior period primarily due to a $3.1 million decrease in other expenses and a $1.1 million decrease in salaries, benefits, and other employee expenses, partially offset by a $1.9 million increase in partner payments.

Gaming & Entertainment’s operating costs and expenses of $97.1 million during the nine months ended September 30, 2025 increased $1.5 million compared to the prior period primarily due to a $2.5 million increase in partner payments, a $2.0 million increase in cloud computing, software, and other related expenses, partially offset by a $2.9 million decrease in other expenses.

As a result of these factors, Gaming & Entertainment’s operating income of $14.7 million during the three months ended September 30, 2025 decreased $0.4 million compared to the prior period. Gaming & Entertainment’s operating income of $34.7 million during the nine months ended September 30, 2025 increased $1.0 million compared to the prior period.

Health & Wellness

The financial results are presented as follows (in thousands):

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Health & Wellness’s revenues of $102.3 million during the three months ended September 30, 2025 increased $11.5 million compared to the prior period primarily due to a $10.5 million increase in advertising and performance marketing revenues, primarily driven by a $9.6 million increase in the Health & Wellness Consumer business due in part to an acquisition in 2025, and a $0.9 million increase in subscription and licensing revenues, and a $0.1 million increase in other revenues.

Health & Wellness’s revenues of $287.5 million during the nine months ended September 30, 2025 increased $30.8 million compared to the prior period primarily due to a $27.2 million increase in advertising and performance marketing revenues, driven by a $26.1 million increase in the Health & Wellness Consumer business due in part to an acquisition in 2025, and a $4.0 million increase in subscription and licensing revenues, partially offset by a $0.3 million decline in other revenues.

Health & Wellness’s operating costs and expenses of $79.4 million during the three months ended September 30, 2025 increased $6.9 million compared to the prior period primarily due to a $1.8 million increase in salaries, benefits, and other employee expenses, a $1.2 million increase in partner payments, and a $1.2 million increase in cloud computing, software, and other related expenses.

Health & Wellness’s operating costs and expenses of $231.7 million during the nine months ended September 30, 2025 increased $15.1 million compared to the prior period primarily due to a $6.8 million increase in partner payments due in part to an acquisition in 2025, a $2.5 million increase in cloud computing, software, and other related expenses, and a $1.8 million increase in depreciation and amortization.

As a result of these factors, Health & Wellness’s operating income of $22.9 million during the three months ended September 30, 2025 increased $4.6 million compared to the prior period. Health & Wellness’s operating income of $55.8 million during the nine months ended September 30, 2025 increased $15.7 million compared to the prior period.

Connectivity

The financial results are presented as follows (in thousands):

Connectivity’s revenues of $57.2 million during the three months ended September 30, 2025 increased $1.2 million compared to the prior period primarily due to an increase of $0.9 million in subscription and licensing revenues driven by a $1.1 million increase in our revenues from network performance services.

Connectivity’s revenues of $170.4 million during the nine months ended September 30, 2025 increased $11.0 million compared to the prior period primarily due to an increase of $10.6 million in subscription and licensing revenues driven primarily by a $10.5 million increase in our revenues from network performance services.

Connectivity’s operating costs and expenses of $40.7 million during the three months ended September 30, 2025 increased $5.6 million compared to the prior period primarily due to a $2.0 million increase in salaries, benefits, and other employee expenses, a $1.7 million increase in professional and other third-party services, and a $1.6 million increase in other related expenses.

Connectivity’s operating costs and expenses of $115.6 million during the nine months ended September 30, 2025 increased $18.1 million compared to the prior period primarily due to a $7.8 million increase in other related expenses due to a 2024 reduction in expense from changes in estimated amounts of deferred acquisition payments related to previously acquired businesses not recurring in 2025, a $4.8 million increase in professional and other third-party services in 2025, and a $4.0 million increase in salaries, benefits, and other employee expenses in 2025.

As a result of these factors, Connectivity’s operating income of $16.5 million during the three months ended September 30, 2025 decreased $4.4 million compared to the prior period. Connectivity’s operating income of $54.8 million during the nine months ended September 30, 2025 decreased $7.1 million compared to the prior period.

Cybersecurity & Martech

The financial results are presented as follows (in thousands):

Cybersecurity & Martech’s revenues of $71.5 million during the three months ended September 30, 2025 increased $1.4 million compared to the prior period primarily due to a $2.5 million increase in subscription and licensing revenues within the Company’s Cybersecurity business and a $2.3 million increase in other revenues related to a business acquired in 2025 within the Company’s Martech business, partially offset by a $3.4 million decrease in subscription and licensing revenues within the Company’s Martech business.

Cybersecurity & Martech’s revenues of $207.1 million during the nine months ended September 30, 2025 decreased $7.3 million compared to the prior period primarily due to a $9.7 million decline in subscription and licensing revenues within certain brands of each of the Company’s Martech business and Cybersecurity business, partially offset by a $2.3 million increase in other revenues related to a business acquired in 2025.

Cybersecurity & Martech‘s operating costs and expenses of $77.9 million during the three months ended September 30, 2025 increased $22.7 million compared to the prior period primarily due to a $17.6 million goodwill impairment, a $3.1 million increase in depreciation and amortization expense, a $1.6 million increase in cloud computing, software, and other related expenses, and a $1.6 million increase in professional and other third-party services, partially offset by a $1.6 million decrease in advertising and marketing related expenses.

Cybersecurity & Martech‘s operating costs and expenses of $190.0 million during the nine months ended September 30, 2025 increased $21.4 million compared to the prior period primarily due to a $17.6 million goodwill impairment, a $6.8 million increase in depreciation and amortization expense, a $2.0 million increase in partner payments, and a $1.8 million increase in cloud computing, software, and other related expenses, partially offset by a $3.6 million decrease in salaries, benefits, and other employees expenses and a $3.0 million decrease in advertising and marketing related expenses.

As a result of these factors, Cybersecurity & Martech’s operating loss of $6.4 million during the three months ended September 30, 2025 increased $21.3 million compared to the prior period. Cybersecurity & Martech’s operating income of $17.1 million during the nine months ended September 30, 2025 decreased $28.7 million compared to the prior period.

Liquidity and Capital Resources

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

Cash, Cash Equivalents, and Investments

Cash, cash equivalents, and investments consisted of (in thousands):

Cash, cash equivalents, and investments held within domestic and foreign jurisdictions were as follows (in thousands):

During the three and nine months ended September 30, 2025, the Company received the distribution from the OCV Fund of $1.5 million and $10.8 million, respectively. For information on long-term investments of the Company, refer to Note 4 — Investments in Part I Item 1 of this Quarterly Report on Form 10-Q for further details.

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, 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 each September 30, 2025 and December 31, 2024, net availability under the Credit Agreement was $348.8 million and $348.9 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 7 – 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 as described above, interest on long-term debt, lease payments on its property and equipment, and holdback amounts in connection with certain business acquisitions. These long-term contractual obligations extend through 2031. Refer to Note 7 – Debt and Note 3 — Business

Acquisition to the Notes to the Condensed Consolidated Financial Statements included in Part I Item 1 of this Quarterly Report on Form 10-Q.

As of September 30, 2025, we and our subsidiaries had outstanding $865.9 million in aggregate principal amount of indebtedness. As of September 30, 2025, our total future minimum lease payments were $30.4 million of which approximately $8.5 million future minimum lease payments are due in the succeeding twelve months. As of September 30, 2025, our liability for uncertain tax positions was $33.1 million. In the ordinary course of business, the Company enters into commitments including those related to cloud computing, information technology, security, and information and document management. The Company also has revenue sharing arrangements with annual minimum guarantees based upon third-party website advertising metrics and other contractual provisions.

We currently anticipate that our existing cash and cash equivalents, 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.

Cash Flows

The following table provides a summary of cash flows from operating, investing, and financing activities (in thousands):

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 $16.1 million decrease in net cash provided by operating activities during the nine months ended September 30, 2025 compared to the prior period was primarily related to the working capital usage by TDS Gift Cards (“TDS”). The decrease in net cash provided by operating activities includes the activities of TDS, which had a negative impact of $(47.6) million during the nine months ended September 30, 2025.

Investing Activities

The $148.2 million decrease in net cash used in investing activities during the nine months ended September 30, 2025 compared to the prior period was primarily related to lower cash used on business acquisitions during the nine months ended September 30, 2025.

Financing Activities

The $211.6 million decrease in net cash used in financing activities during the nine months ended September 30, 2025 compared to the prior period was primarily related to an absence in the 2025 period of cash outflows related to a settlement of a portion of the outstanding principal amount of the Company’s 1.75% Convertible Notes, which occurred during the nine months ended September 30, 2024, as well as a smaller 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.

A summary of share repurchases under the 2020 Program during the nine months ended September 30, 2025 is as follows (in thousands, except share amounts):

(1) Includes the impact of excise taxes.

Cumulatively as of September 30, 2025, 11,770,097 shares have been repurchased under the 2020 Program, at an aggregate cost of $693.5 million (including excise tax). These shares were subsequently retired. Refer to Note 10 – Stockholders’ Equity in Item 1 of Part I of this Quarterly Report on Form 10-Q for further details.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and potential borrowings under our credit facility that would bear variable market interest rates. The primary objectives of our investment activities are to preserve our principal while maximizing yields without significantly increasing risk. To achieve these objectives, we maintain our portfolio of cash equivalents and investments in a mix of instruments that meet high credit quality standards, as specified in our investment policy or otherwise approved by the Board. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of September 30, 2025, the carrying value of our cash and cash equivalents approximated fair value. Our return on these investments is subject to interest rate fluctuations.

As of September 30, 2025 and December 31, 2024, we had $503.4 million and $505.9 million, respectively, of cash and cash equivalent investments primarily in funds that invest in U.S. treasuries, money market funds, as well as demand deposit accounts with maturities within three months or less. Currently, we do not have interest rate risk on our outstanding long-term debt as these arrangements have fixed interest rates. As of September 30, 2025, the carrying value and the fair value of our fixed rate debt was $865.9 million and $829.7 million, respectively. Our fixed rate debt matures as follows: $149.1 million in 2026, $263.1 million in 2028, and $460.0 million in 2030. Interest rates have risen since certain of these sources of financing were obtained. Thus, we may not be able to refinance this fixed rate debt at similar or favorable rates when it matures. Further, our revolving credit agreement bears interest at variable rates. However, during the nine months ended September 30, 2025, we did not need to draw on this revolving credit agreement. If we need to draw on the revolving credit facility in the future, we will be exposed to interest rate changes. Refer to Note 5 — Fair Value Measurements and Note 7 — Debt to the Notes in Item 1 of Part I of this Quarterly Report on Form 10-Q for further details.

We cannot ensure that future interest rate movements will not have a material adverse effect on our future business, prospects, financial condition, operating results, and cash flows. To date, we have not entered into interest rate hedging transactions to control or minimize certain of these risks.

Foreign Currency Risk

We conduct business in certain foreign markets, primarily in Canada, the United Kingdom, Australia, the European Union, Japan, Denmark, Sweden, and Norway. Our principal exposure to foreign currency risk relates to investment and intercompany debt in foreign subsidiaries that transact business in functional currencies other than the U.S. Dollar, primarily the Canadian Dollar, the British Pound Sterling, the Australian Dollar, the Euro, the Japanese Yen, the Danish Krone, the Swedish Krona, and the Norwegian Krone. If we are unable to settle our intercompany debts in a timely manner, we will remain exposed to foreign currency fluctuations.

As we expand our international presence, we become further exposed to foreign currency risk by entering new markets with additional foreign currencies. The economic impact of currency exchange rate movements is often linked to variability in real growth, inflation, interest rates, governmental actions, and other factors. These changes, if material, could cause us to adjust our financing and operating strategies.

As currency exchange rates change, translation of the income statements of the international businesses into U.S. Dollars affects year-over-year comparability of operating results.

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

During the three months ended September 30, 2025 and 2024, foreign exchange gains (losses) amounted to $4.0 million and $(2.6) million, respectively. During the nine months ended September 30, 2025 and 2024, foreign exchange losses amounted to $(4.7) million and $(2.9) million, respectively.

Cumulative translation adjustments, net of tax, included in Other comprehensive income (loss), net for the three months ended September 30, 2025 and 2024 were $(4.4) million and $14.5 million, respectively, and for the nine months ended September 30, 2025 and 2024 were $25.8 million and $7.5 million, respectively.

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

Evaluation of Disclosure Controls and Procedures

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

As of September 30, 2025, under the supervision and with the participation of Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Management’s Report on Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), which occurred during the quarter ended September 30, 2025 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There has not been a material change in our risk factors since the filing of our Annual Report on Form 10-K for the year ended December 31, 2024, except for the risk factor set forth below.

Generative AI and related technologies could present risks and challenges to our business.

Developments in the use of generative AI and related technologies make it easier to access, duplicate, and distribute our content, or otherwise generate output based on our content, without authorization, fair compensation, or proper attribution. These technologies may reduce our online traffic and audience sizes, infringe our intellectual property rights, and adversely affect our business, financial condition, and results of operations. Our reputation may also be harmed if these technologies wrongly attribute inaccurate information to us. We seek to limit such threats; however, policing unauthorized use of our content and intellectual property is often difficult and the steps taken by us may not prevent misuse and infringement of our intellectual property. Although we do not believe these threats have been material to our businesses to date, we expect to continue to be subject to these threats and there can be no assurance that we will not experience a negative impact on our business as a result of them.

The use of copyrighted material by generative AI and related technologies has not been fully interpreted by federal, state, or international courts, and the legal and regulatory framework for generative AI continues to evolve and remains uncertain. It is possible that new laws and regulations will be adopted in the jurisdictions in which we operate, or existing laws and regulations may be interpreted in new ways, which may affect how operators of generative AI and related technologies seek to use our content. For example, in 2024 California enacted a range of laws regulating the use and development of AI, which generally relate to transparency, privacy, and fairness, among other concerns. Furthermore, in Europe the EU’s AI Act was published in the Official Journal of the European Union on July 12, 2024 and entered into force on August 1, 2024. We are still evaluating the impact of these laws on our business. The cost for us to enforce such laws and regulations, or otherwise protect our content and intellectual property rights, could be significant. On April 24, 2025, we filed a lawsuit against OpenAI, Inc. alleging copyright infringement, violations of the Digital Millennium Copyright Act, unjust enrichment and trademark dilution as a result of OpenAI’s unlawful and unauthorized copying and use of our content. See Item 1 – Legal Proceedings for additional information. There can be no assurance that we will be successful in this litigation, or in preventing other generative AI developers from using our content without authorization or fair compensation. Our business, brand, financial condition and results of operations may suffer as a result.