10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 0-25965

ZIFF DAVIS, INC.

(Exact name of registrant as specified in its charter)

Delaware	47-1053457
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

114 5th Avenue

New York, New York 10011

(Address of principal executive offices)

(212) 503-3500

(Registrant’s telephone number, including area code)

J2 Global, Inc., 700 S. Flower Street, 15th Floor, Los Angeles, California 90017

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	ZD	Nasdaq Stock Market LLC

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ý    No  o   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	o	Non-Accelerated filer	o	Smaller reporting company	☐
Emerging growth company	☐

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

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

As of November 5, 2021, the registrant had 48,220,791 shares of common stock outstanding.

ZIFF DAVIS, INC. AND SUBSIDIARIES 

FOR THE QUARTER ENDED SEPTEMBER 30, 2021

INDEX 

			PAGE
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets (unaudited)	3
		Condensed Consolidated Statements of Operations (unaudited)	4
		Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)	5
		Condensed Consolidated Statements of Cash Flows (unaudited)	6
		Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	8
		Notes to Condensed Consolidated Financial Statements (unaudited)	10
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	48
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	62
	Item 4.	Controls and Procedures	64
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	65
	Item 1A.	Risk Factors	65
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
	Item 3.	Defaults Upon Senior Securities	66
	Item 4.	Mine Safety Disclosures	66
	Item 5.	Other Information	66
	Item 6.	Exhibits	67
		Signature	68

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PART I.  FINANCIAL INFORMATION

Item 1.Financial Statements

ZIFF DAVIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands except share and per share data)

	September 30, 2021		December 31, 2020
ASSETS
Cash and cash equivalents	$	546,467	$	242,652
Short-term investments	—		663
Accounts receivable, net of allowances of $14,417 and $16,018, respectively	268,349		325,619
Prepaid expenses and other current assets	73,457		53,909
Total current assets	888,273		622,843
Long-term investments	110,718		97,495
Property and equipment, net	183,179		156,577
Operating lease right-of-use assets	88,331		105,845
Trade names, net	178,322		187,902
Customer relationships, net	301,897		377,194
Goodwill	1,861,332		1,867,430
Other purchased intangibles, net	160,943		176,473
Deferred income taxes, noncurrent	37,761		56,545
Other assets	19,901		17,027
TOTAL ASSETS	$	3,830,657	$	3,665,331
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	228,977	$	230,651
Income taxes payable, current	1,793		31,753
Deferred revenue, current	197,901		190,644
Operating lease liabilities, current	31,636		32,211
Current portion of long-term debt	568,054		396,801
Other current liabilities	36		497
Total current liabilities	1,028,397		882,557
Long-term debt	1,110,699		1,182,220
Deferred revenue, noncurrent	15,189		14,440
Operating lease liabilities, noncurrent	84,519		99,177
Income taxes payable, noncurrent	11,675		11,675
Liability for uncertain tax positions	54,178		57,081
Deferred income taxes, noncurrent	112,482		162,700
Other long-term liabilities	44,259		44,463
TOTAL LIABILITIES	2,461,398		2,454,313
Commitments and contingencies	—		—
Preferred stock, $0.01 par value. Authorized 1,000,000 and none issued	—		—
Preferred stock - Series A, $0.01 par value. Authorized 6,000; total issued and outstanding zero	—		—
Preferred stock - Series B, $0.01 par value. Authorized 20,000; total issued and outstanding zero	—		—
Common stock, $0.01 par value. Authorized 95,000,000; total issued and outstanding 47,825,827 and 44,346,630 shares at September 30, 2021 and December 31, 2020, respectively.	478		443
Additional paid-in capital	508,493		456,274
Retained earnings	931,477		809,107
Accumulated other comprehensive loss	(71,189)		(54,806)
TOTAL STOCKHOLDERS’ EQUITY	1,369,259		1,211,018
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,830,657	$	3,665,331

See Notes to Condensed Consolidated Financial Statements

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ZIFF DAVIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands except share and per share data)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Total revenues	$	444,252	$	356,976	$	1,271,480	$	1,020,353
Cost of revenues (1)	64,302		55,822		185,462		171,755
Gross profit	379,950		301,154		1,086,018		848,598
Operating expenses:
Sales and marketing (1)	139,693		95,074		394,981		287,317
Research, development and engineering (1)	21,639		14,261		62,634		43,273
General and administrative (1)	122,477		114,381		359,498		312,283
Goodwill impairment on business	—		—		32,629		—
Total operating expenses	283,809		223,716		849,742		642,873
Income from operations	96,141		77,438		236,276		205,725
Interest expense, net	(19,862)		(22,712)		(62,832)		(65,879)
(Loss) gain on sale of businesses	(24,600)		17,122		(21,798)		17,122
Loss on investments, net	—		(156)		(16,677)		(20,991)
Other income, net	1,660		14,230		1,367		16,413
Income before income taxes and (loss) income from equity method investment, net	53,339		85,922		136,336		152,390
Income tax expense	8,847		24,330		16,723		49,011
(Loss) income from equity method investment, net	(1,923)		(709)		16,596		(10,799)
Net income	$	42,569	$	60,883	$	136,209	$	92,580
Net income per common share:
Basic	$	0.91	$	1.31	$	3.01	$	1.96
Diluted	$	0.88	$	1.31	$	2.86	$	1.93
Weighted average shares outstanding:
Basic	46,738,073		46,279,515		45,258,819		46,914,750
Diluted	48,582,585		46,309,072		47,565,062		47,620,308
(1) Includes share-based compensation expense as follows:
Cost of revenues	$	108	$	136	$	357	$	413
Sales and marketing	427		321		1,160		1,135
Research, development and engineering	613		425		1,690		1,340
General and administrative	5,607		4,918		15,912		15,755
Total	$	6,755	$	5,800	$	19,119	$	18,643

See Notes to Condensed Consolidated Financial Statements

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ZIFF DAVIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	42,569	$	60,883	$	136,209	$	92,580
Other comprehensive loss, net of tax:
Foreign currency translation adjustment	(11,101)		(3,202)		(16,269)		(12,085)
Change in fair value on available-for-sale investments, net of tax expense of $37 for the three and nine months ended September 30, 2021, respectively, and $141 and $314 for the three and nine months ended September 30, 2020, respectively.	(114)		8		(114)		553
Other comprehensive loss, net of tax	(11,215)		(3,194)		(16,383)		(11,532)
Comprehensive income	$	31,354	$	57,689	$	119,826	$	81,048

See Notes to Condensed Consolidated Financial Statements

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ZIFF DAVIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Nine Months Ended September 30,
Cash flows from operating activities:	2021		2020
Net income	$	136,209	$	92,580
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	196,443		163,680
Amortization of financing costs and discounts	21,295		21,393
Non-cash operating lease costs	8,366		15,686
Share-based compensation	19,119		18,643
Provision for doubtful accounts	7,934		9,508
Deferred income taxes, net	2,537		7,815
Loss (gain) on sale of businesses	21,798		(17,122)
Lease asset impairments	9,410		9,786
Goodwill impairment on business	32,629		—
Changes in fair value of contingent consideration	(567)		(243)
Foreign currency remeasurement gain	181		(15,919)
(Income) loss from equity method investments	(16,596)		10,799
Loss on equity and debt investments	16,677		20,826
Decrease (increase) in:
Accounts receivable	49,888		57,560
Prepaid expenses and other current assets	(10,610)		(3,279)
Other assets	(2,378)		543
Increase (decrease) in:
Accounts payable and accrued expenses	(1,409)		(26,430)
Income taxes payable	(37,863)		(496)
Deferred revenue	4,774		(10,494)
Operating lease liabilities	(19,346)		(12,857)
Liability for uncertain tax positions	(2,903)		7,746
Other long-term liabilities	(5,336)		6,284
Net cash provided by operating activities	430,252		356,009
Cash flows from investing activities:
Proceeds on sale of available-for-sale investments	663		—
Distribution from equity method investment	15,327		—
Purchases of equity method investment	(22,249)		(29,979)
Purchases of equity investments	(999)		(843)
Purchases of property and equipment	(87,495)		(71,266)
Proceeds from sale of assets	—		507
Acquisition of businesses, net of cash received	(112,444)		(27,156)
Proceeds from sale of businesses, net of cash divested	48,876		24,353
Purchases of intangible assets	(1,255)		(2,902)
Net cash used in investing activities	(159,576)		(107,286)
Cash flows from financing activities:
Payment of debt	(402,414)		—
Payment of note payable	—		(400)
Proceeds from bridge loan	485,000		—
Repurchase of common stock	(29,855)		(238,905)
Issuance of common stock under employee stock purchase plan	4,232		3,303
Exercise of stock options	2,880		952
Deferred payments for acquisitions	(13,387)		(20,427)

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Other	(6,619)		(1,377)
Net cash provided by (used in) financing activities	39,837		(256,854)
Effect of exchange rate changes on cash and cash equivalents	(6,698)		446
Net change in cash and cash equivalents	303,815		(7,685)
Cash and cash equivalents at beginning of period	242,652		575,615
Cash and cash equivalents at end of period	$	546,467	$	567,930

See Notes to Condensed Consolidated Financial Statements

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ZIFF DAVIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three and Nine Months Ended September 30, 2020 and 2021

(unaudited, in thousands, except share amounts)

								Accumulated
	Common stock			Additional paid-in		Retained		other comprehensive		Total Stockholders’
	Shares	Amount		capital		earnings		loss		Equity
Balance, July 1, 2020	46,892,691	$	469	$	467,267	$	850,232	$	(54,800)	$	1,263,168
Net income (loss)	—	—		—		60,883		—		60,883
Other comprehensive income, net of tax expense of $141	—	—		—		—		(3,194)		(3,194)
Vested restricted stock	19,893	—		—		—		—		—
Repurchase and retirement of common stock	(2,145,243)	(21)		(21,442)		(128,973)		—		(150,436)
Share based compensation	—	—		5,800		—		—		5,800
Other, net	—	—		116		—		—		116
Balance, September 30, 2020	44,767,341	$	448	$	451,741	$	782,142	$	(57,994)	$	1,176,337

								Accumulated
	Common stock			Additional paid-in		Retained		other comprehensive		Total Stockholders’
	Shares	Amount		capital		earnings		loss		Equity
Balance, July 1, 2021	44,708,235	$	447	$	461,422	$	892,605	$	(59,974)	$	1,294,500
Net income	—	—		—		42,569		—		42,569
Other comprehensive income, net of tax expense of $37	—	—		—		—		(11,215)		(11,215)
Exercise of stock options	23,250	—		1,549		—		—		1,549
Redemption of 3.25% Convertible Note including tax impact	3,031,817	31		44,192		—		—		44,223
Vested restricted stock	112,166	1		(1)		—		—		—
Repurchase and retirement of common stock	(49,641)	(1)		(3,035)		(3,885)		—		(6,921)
Share based compensation	—	—		6,755		—		—		6,755
Other, net	—	—		(2,389)		188		—		(2,201)
Balance, September 30, 2021	47,825,827	$	478	$	508,493	$	931,477	$	(71,189)	$	1,369,259

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								Accumulated
	Common stock			Additional paid-in		Retained		other comprehensive		Total Stockholders’
	Shares	Amount		capital		earnings		loss		Equity
Balance, January 1, 2020	47,654,929	$	476	$	465,652	$	891,526	$	(46,462)	$	1,311,192
Net income	—	—		—		92,580		—		92,580
Other comprehensive income, net of tax expense of $314	—	—		—		—		(11,532)		(11,532)
Exercise of stock options	41,530	—		1,583		(631)		—		952
Issuance of shares under employee stock purchase plan	53,694	—		3,303		—		—		3,303
Vested restricted stock	267,894	3		(3)		—		—		—
Redemption of 3.25% Convertible Note including tax impact	—	—		(12)		—		—		(12)
Repurchase and retirement of common stock	(3,250,706)	(31)		(37,541)		(201,333)		—		(238,905)
Share based compensation	—	—		18,643		—		—		18,643
Other, net	—	$	—	$	116	$	—	$	—	$	116
Balance, September 30, 2020	44,767,341	$	448	$	451,741	$	782,142	$	(57,994)	$	1,176,337

								Accumulated
	Common stock			Additional paid-in		Retained		other comprehensive		Total Stockholders’
	Shares	Amount		capital		earnings		loss		Equity
Balance, January 1, 2021	44,346,630	$	443	$	456,274	$	809,107	$	(54,806)	$	1,211,018
Net income	—	—		—		136,209		—		136,209
Other comprehensive income, net of tax expense of $37	—	—		—		—		(16,383)		(16,383)
Exercise of stock options	68,601	1		2,879		—		—		2,880
Issuance of shares under employee stock purchase plan	58,145	1		4,231		—		—		4,232
Redemption of 3.25% Convertible Note including tax impact	3,050,850	31		44,191		—		—		44,222
Vested restricted stock	546,684	5		(5)		—		—		—
Repurchase and retirement of common stock	(245,083)	(3)		(15,825)		(14,027)		—		(29,855)
Share based compensation	—	—		19,119		—		—		19,119
Other, net	—	—		(2,371)		188		—		(2,183)
Balance, September 30, 2021	47,825,827	$	478	$	508,493	$	931,477	$	(71,189)	$	1,369,259

See Notes to Condensed Consolidated Financial Statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

1.Basis of Presentation

Description of Business

As of September 30, 2021, J2 Global, Inc., together with its subsidiaries (“J2 Global”, the “Company”, “our”, “us”, or “we”), was a leading provider of internet information and services. The Digital Media business specialized in the technology, shopping, gaming, and healthcare markets offering content, tools and services to consumers and businesses. The Cloud Services business provided cloud-based subscription services to consumers and businesses including cloud fax, cybersecurity, privacy and marketing technology.

On October 7, 2021, in connection with the spin-off of its cloud fax business described further below, the Company changed its name from J2 Global, Inc. to Ziff Davis, Inc. (“Ziff Davis”). Additionally, starting October 8, 2021, the Company’s common stock began trading under the stock symbol “ZD.”

The accompanying interim Condensed Consolidated Financial Statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying interim Condensed Consolidated Financial Statements are unaudited and have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements although the Company believes that the disclosures made are adequate to make that information not misleading. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these interim financial statements. It is suggested that these financial statements be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2020, included in our Annual Report (Form 10-K) filed with the SEC on March 1, 2021. Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed therein.

The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period.

Consensus, Inc. Spin-Off

On September 21, 2021, the Company announced that its Board of Directors approved its previously announced separation of the cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“Consensus”). On October 7, 2021 (the “Distribution Date”), the Separation was completed and the Company transferred J2 Cloud Services, LLC to Consensus, Inc. who in turn transferred non-fax assets and liabilities back to Ziff Davis such that Consensus was left with the cloud fax business. The Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution. The Company’s stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock. On October 8, 2021, Consensus began trading on Nasdaq under the stock symbol “CCSI”. Ziff Davis, Inc. (formerly J2 Global, Inc.) retained a 19.9% interest in Consensus following the Separation.

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about investment classifications and the reported amounts of net revenue and expenses during the reporting period. The Company believes that its most significant estimates are those related to revenue recognition, valuation and impairment of investments, its assessment of ownership interests as variable interest entities and the related determination of consolidation, share-based compensation expense, fair value of assets acquired and liabilities assumed in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingencies

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and allowances for doubtful accounts. On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances. Actual results could materially differ from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to the novel coronavirus pandemic (“COVID-19”).

Allowances for Doubtful Accounts

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

Revenue Recognition

The Company recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (see Note 3 - Revenues).

Principal vs. Agent

The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance under Topic 606 for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer and (ii) whether the Company controls the specified goods or services prior to transferring control to the customer.

Sales Taxes

The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer.

Investments

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

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

The Company accounts for its investments in equity securities in accordance with ASC Topic No. 321, Investments - Equity Securities (“ASC 321”) which requires the accounting for equity investments (other than those accounted for using the equity method of accounting) generally be measured at fair value for equity securities with readily determinable fair values. For equity securities without a readily determinable fair value that are not accounted for by the equity method, the Company measures the equity security using cost, less impairment, if any, and plus or minus observable price changes arising from

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orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported in current earnings (see Note 5 - Investments).

The Company assesses whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions (see Note 5 - Investments).

Variable Interest Entities (“VIE”)

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

a) the Company has the power to direct the activities of the VIE that most significantly impacts the VIEs economic performance (the power criterion); and

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

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

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

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

Impairment or Disposal of Long-Lived Assets

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

The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of long-lived assets may not be recoverable. During the three and nine months ended September 30, 2021, the Company recorded an impairment of certain operating right-of-use assets (see Note 10 - Leases). In the third quarter of 2020, the Company recorded impairment of certain operating right-of-use assets and associated property and equipment. (see Note 10 - Leases).

The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being

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actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale.

Business Combinations and Valuation of Goodwill and Intangible Assets

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

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from 1 to 20 years and are included in general and administrative expenses on the Condensed Consolidated Statements of Operations. The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic No. 350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested annually for impairment or more frequently if the Company believes indicators of impairment exist. In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then it performs the impairment test upon goodwill. The impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using the income approach methodology of valuation. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference. In the second quarter of 2021, the Company recorded an impairment to goodwill associated with the plan to sell the Company’s B2B Backup business. This sale closed during the third quarter of 2021 (see Note 6 – Dispositions). No impairment was recorded in the third quarter of 2020. In the first quarter of 2021, the Company changed the annual goodwill impairment assessment date for the Cloud Services business from September 30 to October 1, as it determined this date is preferable, and concluded this was not a material change in accounting principal.

Contingent Consideration

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

The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the Condensed Consolidated Balance Sheets. The Company considers several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former shareholders of acquired companies that remain as key employees receive

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compensation other than contingent earn-out payments at a reasonable level compared with the compensation of the Company’s other key employees. The contingent earn-out payments are not affected by employment termination.

The Company measures the contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 7 - Fair Value Measurements). The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses a probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and the amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in its Condensed Consolidated Statements of Cash Flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

The Company reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior quarterly amounts. Changes in the estimated fair value of its contingent earn-out liabilities are reported in general and administrative expenses on the Condensed Consolidated Statements of Operations.

Income Taxes

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

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

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

In addition, on March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was enacted into law and provides for changes to various tax laws that impact businesses. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased

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limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act also appropriated funds for the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19. The Company did not seek to borrow any funds under the program. However, as a result of an acquisition that closed during the quarter ended December 31, 2020, the Company assumed outstanding PPP loans that had started the process of being forgiven prior to the closing of the acquisition. During the second quarter of 2021, the Company received approval from the SBA to forgive the entire amount of the outstanding PPP Loan. The amount forgiven did not have a significant impact to the Company’s financial statements.

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

Share-Based Compensation

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

Reclassifications

Certain prior year reported amounts have been reclassified to conform to the 2021 presentation.

2.    Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company adopted this ASU in the first quarter of 2021 and has identified no material effect on its financial statements or disclosures.

In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investment - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The amendments in this ASU clarify certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method of accounting in Topic 323, and the accounting for certain forward contracts and purchased options under Topic 815. This ASU identifies two main areas for improvement: (1) accounting for certain equity securities upon the application or discontinuation of the equity method of accounting and (2) scope considerations for forward contracts and purchased options on certain securities. The amendment states, as it is related to the first area of improvement, that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendment also states, as it is relates to forward contracts and purchased options on certain securities, an entity should consider certain criteria to determine the accounting for those forward contracts and purchased options. The Company adopted this ASU in the first quarter of 2021 and has identified no effect on its financial statements or disclosures.

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

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

In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements. The amendments in this ASU improve the consistency of the codification and reorganize the guidance into appropriate sections providing less opportunities for disclosures to be missed. The amendments in this update do not change GAAP and are not expected to result in a significant change in practice. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020. The Company adopted this ASU in the first quarter of 2021 and has identified no effect on its financial statements or disclosures.

3.Revenues

Digital Media

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

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

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

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

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

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

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

Cloud Services

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

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

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

	Three Months Ended September 30,				Nine Months Ended September 30,
Digital Media	2021		2020		2021		2020
Advertising (a)	$	198,794	$	138,441	$	574,465	$	380,188
Subscription and licensing (a)	52,010		44,423		145,935		121,028
Other (a)	11,625		3,920		22,880		12,246
Total Digital Media revenues	$	262,429	$	186,784	$	743,280	$	513,462
Cloud Services
Subscription and licensing	$	182,087	$	170,233	$	528,699	$	507,021
Other	92		15		267		69
Total Cloud Services revenues	$	182,179	$	170,248	$	528,966	$	507,090
Corporate	$	—	$	—	$	—	$	1
Elimination of inter-segment revenues	(356)		(56)		(766)		(200)
Total Revenues	$	444,252	$	356,976	$	1,271,480	$	1,020,353
Timing of revenue recognition
Point in time	$	13,606	$	8,396	$	30,669	$	19,366
Over time	430,646		348,580		1,240,811		1,000,987
Total	$	444,252	$	356,976	$	1,271,480	$	1,020,353

(a) The Company reclassified approximately $3.2 million and $8.8 million of revenue during the three and nine months ended September 30, 2020, respectively, from ‘Subscription and licensing’ to ‘Advertising’ and reclassified approximately $1.7 million and $6.7 million during the three and nine months ended September 30, 2020, respectively, from “Subscription and licensing’ to ‘Other’ to conform with current period presentation. These reclassifications were made in order to separate games publishing revenue from traditional advertising revenue.

The Company has recorded $31.8 million and $29.0 million of revenue for the three months ended September 30, 2021 and 2020, respectively, and $161.2 million and $142.5 million of revenue for the nine months ended September 30, 2021 and 2020, respectively, which was previously included in the deferred revenue balance as of the beginning of each respective year.

As of September 30, 2021, the Company acquired $7.2 million in deferred revenue in connection with the Company’s business acquisitions (see Note 4 - Business Acquisitions) which are subject to purchase accounting adjustments.

Performance Obligations

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, revenues are allocated to each performance obligation based on its relative standalone selling price.

The Company satisfies its performance obligations within the Digital Media business upon delivery of services to its customers. In addition, the Company provides content to its advertising partners which the Company sells to its partners’ customer base and receives a revenue share based on the terms of the agreement.

The Company satisfies its performance obligations within the Cloud Services business upon delivery of services to its customers. Payment terms vary by type and location of our customers and the services offered. The term between invoicing and when payment is due is not significant. Due to the nature of the services provided, there are no obligations for returns.

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Significant Judgments

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

Performance Obligations Satisfied Over Time

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

Advertising

•Website reporting by the Company, the customer, or a third-party contains the delivery evidence needed to satisfy the performance obligations within the advertising contract

•Successfully delivered leads are evidenced by either delivery reports from the Company’s internal lead management systems or through e-mail communication and/or other evidence of delivery showing acceptance of leads by the customer

•Commission is evidenced by direct site reporting from the affiliate or via direct confirmation from the customer

Subscription and Licensing

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

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

The Company’s Cloud Services business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based and include fax, voice, backup, security, CPP, and email marketing products where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following materially distinct performance obligations are satisfied: 

•Faxing capabilities are provided

•Voice services are provided

•Email marketing services are provided

•Consumer privacy services are provided

•Security solutions, including email and endpoint are provided

•Online data backup capabilities are provided

The Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period and believes that the method used is a faithful depiction of the transfer of goods and services.

Performance Obligations Satisfied at a Point in Time

    The Company’s Digital Media business has technology subscriptions that have standalone functionality. As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time. This is evidenced once a digital key is delivered to the customer. Once the key is delivered to the customer, the customer has full control of the technology and the Company has no further performance obligations. The Company has concluded that revenue is recognized once the digital key is delivered. The Company believes that this method is a faithful depiction of the transfer of goods and services.

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Practical Expedients

Existence of a Significant Financing Component in a Contract

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

Costs to Fulfill a Contract

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

In addition, the Company partners with various affiliates in order to generate a portion of its revenue for certain lines of business. The commissions earned by the Company’s affiliates are incentive based and are paid on the acquisition of new customers in a given period. For those customers with amortization periods determined to be greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

Revenues Invoiced

The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.

4.Business Acquisitions

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

The Company completed the following acquisitions during the first nine months of fiscal 2021, paying the purchase price in cash in each transaction: (a) an asset purchase of DailyOM, acquired on April 30, 2021, a California-based-based provider of health and wellness digital media, content and learning business; (b) a share purchase of SEOmoz, acquired on June 4, 2021, a Seattle-based provider of search engine optimization (“SEO”) solutions; (c) an asset purchase of Solutelia, LLC, acquired on July 15, 2021, a Colorado-based on-demand wireless telecommunications network monitoring and analysis, testing and optimization software business and related wireless telecommunications engineering services business; (d) a stock purchase of Arthur L. Davis Publishing, acquired on September 23, 2021, an Iowa-based digital nursing publication; and (e) three immaterial Digital Media acquisitions.

The Condensed Consolidated Statement of Operations since the date of each acquisition and balance sheet as of September 30, 2021, reflect the results of operations of all 2021 acquisitions. For the nine months ended September 30, 2021, these acquisitions contributed $21.3 million to the Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to the Company’s integration activities and is impracticable to provide. Total consideration for these transactions was $135.1 million net of cash acquired and assumed liabilities and is subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

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Assets and Liabilities	Valuation
Accounts receivable	$	5,167
Prepaid expenses and other current assets		1,639
Property and equipment		1,838
Operating lease right-of-use assets, noncurrent		5,888
Trade names		11,843
Customer relationship		11,521
Goodwill		85,552
Other intangibles		35,285
Deferred tax asset		230
Accounts payable and accrued expenses		(2,800)
Deferred revenue		(7,192)
Operating lease liabilities, current		(7,191)
Other current liabilities		(14)
Deferred tax liability		(4,936)
Other long-term liabilities		(1,726)
Total	$	135,104

During the nine months ended September 30, 2021, the purchase price accounting has been finalized for EDC Systems Inc (operating under the name “SRFax”), Inspired eLearning and other immaterial Digital Media and Cloud Services businesses. The initial accounting for the 2021 acquisitions are incomplete and subject to change. The Company has recorded provisional amounts which may be based upon past acquisitions with similar attributes for certain intangible assets (including trade names, software and customer relationships), preliminary acquisition date working capital and related tax items.

During the nine months ended September 30, 2021, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Digital Media business, which resulted in a net decrease in goodwill of $1.5 million. In addition, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Voice, Backup, Security and CPP businesses which resulted in a net increase in goodwill of $0.5 million. (see Note 8 - Goodwill and Intangible Assets). Such adjustments had an immaterial impact on the amortization expense within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with these acquisitions during the nine months ended September 30, 2021 is $85.6 million, of which $44.1 million is expected to be deductible for income tax purposes.

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Pro Forma Financial Information for All 2021 Acquisitions

The following unaudited pro forma supplemental information is based on estimates and assumptions that the Company believes to be reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of income in future periods or the results that actually would have been realized had the Company and the acquired businesses been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2020. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.

The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its 2021 acquisitions as if each acquisition had occurred on January 1, 2020 (in thousands, except per share amounts):

	Nine Months Ended September 30,
	2021		2020
	(unaudited)		(unaudited)
Revenues	$	1,313,417	$	1,084,967
Net income	$	143,420	$	95,036
EPS - Basic	$	3.17	$	2.02
EPS - Diluted	$	3.01	$	1.99

5.Investments

Investments consist of equity and debt securities. 

The Company determined the equity securities that were received as part of the consideration for the sale of Tea Leaves Health, LLC (“Tea Leaves”) in fiscal year 2017 are without a readily determinable fair value because these securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. As a result, management has elected to alternatively measure this investment at cost, less impairment, adjusted for subsequent observable price changes to estimate fair value. The Company will make a “reasonable effort” to identify any observable price changes for identical or similar investments with the issuer that are known are can be reasonably known. Any changes in the carrying value of the equity securities will be reported in current earnings as (gain) loss on investments, net. In addition, the Company determined that the shares of redeemable preferred stock that were also received as part of the consideration for the sale of Tea Leaves are corporate debt securities and are classified as available-for-sale securities. These debt securities were subsequently exchanged in a non-cash transaction in the first quarter of 2020.

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

The following table summarizes the gross unrealized gains and losses and estimated fair values for the Company’s securities without a readily determinable fair value (in thousands):

	Cost		Impairment		Adjustments		Reported Amount
September 30, 2021
Equity securities	$	31,777	$	(16,677)	$	(479)	$	14,621
Total	$	31,777	$	(16,677)	$	(479)	$	14,621
December 31, 2020
Equity securities	$	50,384	$	(19,605)	$	(479)	$	30,300
Total	$	50,384	$	(19,605)	$	(479)	$	30,300

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During the second quarter of 2021, the Company recorded a $16.7 million impairment loss on investments related to a decline in value due to a pending sales transaction of an investee. The Company is not expected to recover the recorded cost of these securities and has reduced such amount to what the Company expects to receive as a result of the sale.

During the first nine months of 2020, the Company recorded a loss on investments of $21.0 million, which consists primarily of the following:

1.an impairment loss of $19.6 million due to changes in the investee’s capital structure and overall market volatility;

2.a loss on exchange of redeemable preferred stock, in the amount of $4.4 million, that that was previously classified as available-for-sale corporate debt securities for a new series of preferred stock classified as equity securities; partially offset by

3.a recognized gain of $3.2 million due to the Company’s purchase of preferred stock for $0.8 million.

Impairment losses, including gains and losses, are recorded in loss on investments, net on the Condensed Consolidated Statements of Operations.

At September 30, 2021, cumulative impairment losses on these securities were $40.5 million.

The following table summarizes the gross unrealized gains and losses and fair values for investments classified as available-for-sale investments (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2021
Corporate debt securities	$	—	$	—	$	—	$	—
Total	$	—	$	—	$	—	$	—
December 31, 2020
Corporate debt securities	$	511	$	152	$	—	$	663
Total	$	511	$	152	$	—	$	663

The Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported as a component of other comprehensive income.

The following table summarizes the Company’s corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands):

	September 30, 2021		December 31, 2020
Due within 1 year	$	—	$	663
Due within more than 1 year but less than 5 years	—		—
Due within more than 5 years but less than 10 years	—		—
Due 10 years or after	—		—
Total	$	—	$	663

Recognition and Measurement of Credit Loss of Debt Securities

The Company adopted ASU 2016-13, Financial Instrument-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments in the first quarter of 2020. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. This ASU also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded though an allowance for credit losses rather than a reduction in amortized cost basis of the securities. These changes will result in earlier recognition of credit losses, if any.

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

There were no investments in an unrealized loss position as of December 31, 2020.

As of December 31, 2020, the Company did not recognize any credit losses related to debt securities.

On September 25, 2017, the Company entered into a commitment to invest $200 million (approximately 76.6% of equity) in the OCV Fund. The primary purpose of the Fund is to provide a limited number of select investors with the opportunity to realize long-term appreciation from public and private companies, with a particular focus on the technology and life science industries. The general activities of the OCV Fund is to buy, sell, hold and otherwise invest in securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures and evidence of indebtedness; to exercise all rights, powers, privileges and other incidents of ownership or possession with respect to securities held or owned by the OCV Fund; to enter into, make and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable or desirable to carry out the foregoing.

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

In the first nine months of 2021, the Company received capital call notices from the management of OCV Management, LLC for $21.2 million, inclusive of certain management fees, of which $21.2 million has been paid for the nine months ended September 30, 2021. In the first nine months of 2020, the Company received capital call notices from the management of OCV Management, LLC for $31.0 million, inclusive of certain management fees, of which $30.0 million had been paid for the nine months ended September 30, 2020.

During the three and nine months ended September 30, 2021, the Company received distributions from OCV of $15.3 million and $15.3 million, respectively.

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

During the three months ended September 30, 2021 and 2020, the Company recognized an investment loss of $(1.9) million and $(0.7) million, net of tax benefit, respectively, and during the nine months ended September 30, 2021 and 2020, the Company recognized an investment gain (loss) of $16.6 million and $(10.8) million, net of tax (benefit) expense, respectively. The fiscal 2021 gain was primarily the result of gains in the underlying investments. The fiscal 2020 loss was primarily a result of the impairment of two of its investments as a result of COVID-19 in the amount of $7.0 million, net of tax benefit. In addition, The Company recognized an investment loss in the amount of $3.8 million, net of tax benefit. The loss is presented in the Company’s Condensed Consolidated Statement of Operations as income (loss) from equity method investment, net.

During the three months ended September 30, 2021 and 2020, the Company recognized management fees of $0.8 million and $0.8 million, net of tax benefit, respectively, and for the nine months ended September 30, 2021 and 2020, the Company recognized management fees of $2.3 million and $2.3 million, net of tax benefit, respectively.

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The following table discloses the carrying amount for the Company’s equity method investment (in thousands):

	September 30, 2021		December 31, 2020
Equity method investment	$	96,097	$	67,195
Maximum exposure to loss	$	96,097	$	67,195

As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership. In addition, the Company is not required to contribute capital in an aggregate amount in excess of its capital commitment and any expected losses will not be in excess of the Capital Account. Finally, there are no call or put options, or other types of arrangements, which limit the Company’s ability to participate in losses and returns of the Fund.

6.Dispositions

During the first quarter of 2021, the Company committed to a plan to sell certain Voice assets in the United Kingdom as they were determined to be non-core assets. Such assets were recorded within the Voice, Backup, Security, and CPP reportable segment. On February 9, 2021, in a cash transaction, the Company sold the Voice assets. As of September 30, 2021, the total gain recognized on the sale was $2.8 million which was recorded in (loss) gain on sale of businesses on the Condensed Consolidated Statement of Operations.

During the first quarter of 2021, the Company committed to a plan to sell its B2B Backup business as it was determined to be a non-core business. The B2B Backup business met the held for sale criteria, and accordingly, the assets and liabilities were presented as held for sale on the Condensed Consolidated Statement of Operations at March 31, 2021 and June 30, 2021. The business is recorded within the Voice, Backup, Security, and CPP reportable segment. During the second quarter of 2021, the Company received an offer to purchase the B2B Backup business and management determined that the fair value of the business less cost to sell was lower than its carrying amount. As a result, the Company recorded an impairment to goodwill of $32.6 million during the second quarter of 2021, which was recorded in impairment of business on the Condensed Consolidated Statement of Operations (see Note 8 - Goodwill and Intangible Assets). On September 17, 2021, in a cash transaction, the Company sold the B2B Backup business. As of September 30, 2021, the total loss recognized on the sale was $24.6 million which was recorded in loss on sale of business on the Condensed Consolidated Statement of Operations.

7.Fair Value Measurements

The Company complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

§	Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
§	Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
§	Level 3 – Unobservable inputs which are supported by little or no market activity.

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

The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices. The fair value of long-term debt is determined using recent quoted market prices or dealer quotes for each of the Company’s instruments, which are Level 1 inputs. The fair value of the Company’s debt instruments at September 30, 2021 and December 31, 2020 was $2.0 billion and $2.0 billion, respectively (see Note 9 - Debt).

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Certain of the Company’s debt securities are classified within Level 2. The Company values these Level 2 investments based on model-driven valuations using significant inputs derived from or corroborated by observable market data.

The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. For similar reasons, certain of the Company’s available-for-sale debt securities are classified within Level 3. The valuation approaches used to value the Level 3 investments consider unobservable inputs in the market such as time to liquidity, volatility, dividend yield, and breakpoints. Significant increases or decreases in either of the inputs in isolation would result in a significantly lower or higher fair value measurement.

The following table presents the fair values, valuation techniques, unobservable inputs, and ranges of the Company’s financial liabilities categorized within Level 3. The weighted averages below are a product of the unobservable input and fair value of the contingent consideration arrangement as of September 30, 2021.

	Valuation Technique	Unobservable Input	Range	Weighted Average
Contingent Consideration	Option-Based Model	Risk free rate	1.9% - 2.2%	2.0	%
		Debt spread	0.0% - 74.7%	13.6	%
		Probabilities	100.0%	100.0	%
		Present value factor	2.2% - 26.9%	15.4	%
		Discount rate	27.3% - 38.0%	32.3	%

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The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):

September 30, 2021	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	10,391	$	—	$	—	$	10,391	$	10,391
Corporate debt securities	—		—		—		—		—
Total assets measured at fair value	$	10,391	$	—	$	—	$	10,391	$	10,391
Liabilities:
Contingent consideration	$	—	$	—	$	9,296	$	9,296	$	9,296
Debt	1,975,779		—		—		1,975,779		1,678,753
Total liabilities measured at fair value	$	1,975,779	$	—	$	9,296	$	1,985,075	$	1,688,049
December 31, 2020	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	10,413	$	—	$	—	$	10,413	$	10,413
Corporate debt securities	—		663		—		663		663
Total assets measured at fair value	$	10,413	$	663	$	—	$	11,076	$	11,076
Liabilities:
Contingent consideration	$	—	$	—	$	9,094	$	9,094	$	9,094
Debt	1,960,527		—		—		1,960,527		1,579,021
Total liabilities measured at fair value	$	1,960,527	$	—	$	9,094	$	1,969,621	$	1,588,115

The following table presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands):

	Level 3		Affected line item in the Statement of Operations
Balance as of January 1, 2021	$	9,094
Contingent consideration	6,600
Total fair value adjustments reported in earnings	(567)		General and administrative
Contingent consideration payments	(5,831)		Not applicable
Balance as of September 30, 2021	$	9,296

In connection with the Company’s acquisition activity, contingent consideration of up to $14.9 million may be payable upon achieving certain revenue, and/or unique visitor thresholds and had a combined fair value of $9.3 million and $9.1 million at September 30, 2021 and December 31, 2020, respectively. Due to the achievement of certain thresholds, $5.8 million was paid in the first nine months of 2021.

During the nine months ended September 30, 2021, the Company recorded a decrease in the fair value of the contingent consideration of $0.6 million and reported such decrease in general and administrative expenses.

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8.Goodwill and Intangible Assets

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

The changes in carrying amounts of goodwill for the nine months ended September 30, 2021 are as follows (in thousands):

	Fax and Martech		Voice, Backup, Security and CPP		Total Cloud Services		Digital Media		Consolidated
Balance as of January 1, 2021	$	425,471	$	499,025	$	924,496	$	942,934	$	1,867,430
Goodwill acquired (Note 4)	41,152		—		41,152		44,400		85,552
Goodwill removed due to sale of businesses (1)	—		(50,276)		(50,276)		—		(50,276)
Goodwill impairment (2)	—		(32,629)		(32,629)		—		(32,629)
Purchase accounting adjustments (3)	—		505		505		(1,468)		(963)
Foreign exchange translation	(3,462)		(3,890)		(7,352)		(430)		(7,782)
Balance as of September 30, 2021	$	463,161	$	412,735	$	875,896	$	985,436	$	1,861,332

(1) On February 9, 2021, in a cash transaction, the Company sold certain of its Voice assets in the United Kingdom which resulted in $1.3 million of goodwill being removed in connection with this sale and on September 17, 2021, the Company sold certain of its B2B Backup assets which resulted in $49.0 million of goodwill being removed in connection with the sale (see Note 6 - Dispositions).

(2) During the nine months ended September 30, 2021, the Company had an impairment to goodwill of $32.6 million in connection with certain B2B Backup assets.

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

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Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of September 30, 2021 and December 31, 2020 as follows (in thousands):

	September 30, 2021		December 31, 2020
Trade names	$	27,412	$	27,460
Other	4,317		4,329
Total	$	31,729	$	31,789

Intangible Assets Subject to Amortization:

As of September 30, 2021, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	9.7 years	$	258,382	$	107,472	$	150,910
Patent and patent licenses	5.4 years	67,962		67,250		712
Customer relationships (1)	8.6 years	764,852		462,955		301,897
Other purchased intangibles	4.2 years	468,934		313,020		155,914
Total		$	1,560,130	$	950,697	$	609,433

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

As of December 31, 2020, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.0 years	$	260,715	$	100,273	$	160,442
Patent and patent licenses	5.5 years	67,980		66,964		1,016
Customer relationships (1)	8.0 years	848,875		471,681		377,194
Other purchased intangibles	4.3 years	436,352		265,224		171,128
Total		$	1,613,922	$	904,142	$	709,780

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

Amortization expense, included in general and administrative expense, approximated $47.8 million and $41.2 million for the three months ended September 30, 2021 and 2020, respectively, and $144.3 million and $115.6 million for the nine months ended September 30, 2021 and 2020, respectively. Amortization expense is estimated to approximate $43.8 million, $143.5 million, $123.2 million, $80.2 million and $75.1 million for the remaining three months of fiscal year 2021 through fiscal year 2025, respectively, and $143.6 million thereafter through the duration of the amortization period.

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9.    Debt

The Company’s debt as of September 30, 2021 and December 31, 2020 consists of the following (in thousands):

	September 30, 2021		December 31, 2020
4.625% Senior Notes	$	750,000	$	750,000
Convertible Notes:
3.25% Convertible Notes	—		402,414
1.75% Convertible Notes	550,000		550,000
Total Notes	1,300,000		1,702,414
Paycheck Protection Program Loan	—		910
Bridge Loan	485,000		—
Less: Unamortized discount	(96,429)		(112,798)
Deferred issuance costs	(9,818)		(11,505)
Total debt	1,678,753		1,579,021
Less: current portion	(568,054)		(396,801)
Total long-term debt, less current portion	$	1,110,699	$	1,182,220

4.625% Senior Notes

On October 7, 2020, the Company completed the issuance and sale of $750 million aggregate principal amount of its 4.625% senior notes due 2030 (the“4.625% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933. The Company received proceeds of $742.7 million after deducting the initial purchasers’ discounts, commissions and offering expenses. The net proceeds were used to redeem all of its outstanding 6.0% Senior Notes due in 2025 and, remaining net proceeds were available for general corporate purposes which may include acquisitions and the repurchase or redemption of other outstanding indebtedness.

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

The Company may redeem some or all of the 4.625% Senior Notes at any time on or after October 15, 2025 at specified redemption prices plus accrued and unpaid interest, if any, to, but excluding the redemption date. Before October 15, 2023, and following certain equity offerings, the Company also may redeem up to 40% of the 4.625% Senior Notes at a price equal to 104.625% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding the redemption date. The Company may make such redemption only if, after such redemption, at least 50% of the aggregate principal amount of the 4.625% Senior Notes remains outstanding. In addition, at any time prior to October 15, 2025, the Company may redeem some or all of the 4.625% Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium.

The Indenture contains covenants that restrict the Company’s ability to (i) pay dividends or make distributions on the Company’s common stock or repurchase the Company’s capital stock; (ii) make certain restricted payments; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants contain certain exceptions. Restricted payments are applicable only if the Company and subsidiaries designated as restricted subsidiaries have a net leverage ratio of greater than 3.5 to 1.0. In addition, if such net leverage ratio is in excess of 3.5 to 1.0, the restriction on restricted payments is subject to various exceptions, including the total aggregate amount not exceeding the greater of (A) $250 million and (B) 50.0% of EBITDA for the most recently ended four fiscal quarter period ended immediately prior to such date for which internal financial statements are available. The Company is in compliance with its debt covenants as of September 30, 2021.

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On September 24, 2021, the Company announced the commencement of a cash tender offer for up to a maximum aggregate amount of $90.0 million of its 4.625% Senior Notes. Accordingly, as of September 30, 2021, the Company has classified $83.3 million of its 4.625% Senior Notes as short-term on its Condensed Consolidated Balance Sheet as of September 30, 2021.The remainder of the 4.625% Senior Notes are presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheet as of September 30, 2021.

As of September 30, 2021 and December 31, 2020, the estimated fair value of the 4.625% Senior Notes was approximately $797.9 million and $796.9 million, and was based on recent quoted market prices or dealer quotes for the 4.625% Senior Notes which are Level 1 inputs (see Note 7 - Fair Value Measurements).

3.25% Convertible Notes

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

In connection with the spin-off of Consensus, the Company called its 3.25% Convertible Notes for redemption and on August 2, 2021, the Company redeemed in full all of its outstanding 3.25% Convertible Notes. During the three and nine months ended September 30, 2021, the Company satisfied its conversion obligation by paying the principal of $399.6 million and $402.4 million, respectively, in cash and issued 3,031,817 and 3,050,850 shares of the Company’s common stock. respectively (see Note 13 - Stockholders’ Equity).

The 3.25% Convertible Notes were carried at face value less any unamortized debt discount and debt issuance costs. The fair value of the 3.25% Convertible Notes at each balance sheet date was determined based on recent quoted market prices or dealer quotes for the 3.25% Convertible Notes, which are Level 1 inputs (see Note 7 - Fair Value Measurements). If such information was not available, the fair value was determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of September 30, 2021 and December 31, 2020, the estimated fair value of the 3.25% Convertible Notes was approximately zero and $593.1 million, respectively.

1.75% Convertible Notes

On November 15, 2019, the Company issued $550.0 million aggregate principal amount of 1.75% convertible senior notes due November 1, 2026 (the “1.75% Convertible Notes”). the Company received proceeds of $537.1 million in cash, net of purchasers’ discounts and commissions and other debt issuance costs. A portion of the net proceeds were used to pay off all amounts outstanding under the then-existing Credit Facility. The 1.75% Convertible Notes bear interest at a rate of 1.75% per annum, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2020. The 1.75% Convertible Notes will mature on November 1, 2026, unless earlier converted or repurchased.

Holders may surrender their 1.75% Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding July 1, 2026 only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on March 31, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding the calendar quarter is greater than 130% of the applicable conversion price of the 1.75% Convertible Notes on each such applicable trading day; (ii) during the five business day period following any 10 consecutive trading day period in which the trading price per $1,000 principal amount of 1.75% Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after July 1, 2026, and prior to the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their notes at any time, regardless of the foregoing circumstances. The Company will settle conversions of the 1.75% Convertible Notes by paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination thereof at the Company’s election. The Company currently intends to satisfy its conversion obligation by paying and delivering a combination of cash

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and shares of the Company’s common stock. Holders of the notes will have the right to require the Company to repurchase for cash all or any portion of their notes upon the occurrence of certain corporate events, subject to certain conditions. During the third quarter of 2021 and the fourth quarter of 2020, the last reported sale price of the Company’s common stock did not meet the conversion price threshold requirements of the 1.75% Convertible Notes. Therefore, the net carrying amount of the 1.75% Convertible Notes is classified as long-term debt on the Condensed Consolidated Balance Sheets.

As of September 30, 2021, the conversion rate is 7.9864 shares of the Company’s common stock for each $1,000 principal amount of 1.75% Convertible Notes, which represents an conversion price of approximately $125.21 per share of the Company’s common stock. The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the 1.75% Convertible Notes, but will not be adjusted for accrued interest. In addition, upon the occurrence of a “Make-Whole Fundamental Change” (as defined in the 1.75% Convertible Note Indenture), the Company will increase the conversion rate for a holder that elects to convert its 1.75% Convertible Notes in connection with such a corporate event in certain circumstances.

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

The 1.75% Convertible Notes are the Company’s general senior unsecured obligations and rank: (i) senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 1.75% Convertible Notes; (ii) equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated, including its existing 3.25% Convertible Notes due 2029; (iii) effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries, including the then-existing 6.0% Senior Notes due 2025.

Accounting for the 1.75% Convertible Notes

In accordance with ASC 470-20, Debt with Conversion and Other Options, convertible debt that can be settled for cash is required to be separated into the liability and equity component at issuance, with each component assigned a value. The value assigned to the liability component is the effective fair value, as of the issuance date, of similar debt without the conversion feature. The difference between the cash proceeds and estimated fair value of the liability component, representing the value of the conversion premium assigned to the equity component, is recorded as a debt discount on the issuance date. This debt discount is amortized to interest expense using the effective interest method over the period from the issuance date through the maturity date of November 1, 2026.

The Company estimated the borrowing rates of similar debt without the conversion feature at origination to be 5.5% for the 1.75% Convertible Notes and determined the debt discount to be $118.9 million. As a result, a conversion premium after tax of $88.1 million (net of $2.8 million of the deferred issuance costs) are recorded in additional paid-in capital. The aggregate debt discount is amortized as interest expense over the period from the issuance date through the maturity date of November 1, 2026, which management believes is the expected life of the 1.75% Convertible Notes using an interest rate of 5.5%. As of September 30, 2021, the remaining period over which the unamortized debt discount will be amortized is 5.1 years.

In connection with the issuance of the 1.75% Convertible Notes, the Company incurred $12.9 million of deferred issuance costs, which primarily consisted of the underwriters’ discount, legal and other professional service fees. Of the total deferred issuance costs incurred, $10.1 million of such deferred issuance costs were attributable to the liability component and are recorded within other assets and are being amortized to interest expense through the maturity date. The remaining $2.8 million of the deferred issuance costs were netted with the equity component in additional paid-in capital at the issuance date. As of September 30, 2021, the unamortized deferred issuance costs were $8.0 million.

The 1.75% Convertible Notes are carried at face value less any unamortized debt discount and issuance costs. The fair value of the 1.75% Convertible Notes at each balance sheet date is determined based on recent quoted market prices or dealer quotes for the 1.75% Convertible Notes, which are Level 1 inputs (see Note 7 - Fair Value Measurements). If such information is not available, the fair value is determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of September 30, 2021 and December 31, 2020, the estimated fair value of the 1.75% Convertible Notes was approximately $692.9 million and $569.7 million, respectively.

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Credit Facility and Bridge Loan

On April 7, 2021, the Company entered into a $100.0 million Credit Agreement (the “Credit Agreement”). Subject to customary conditions, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250.0 million, for a total aggregate commitment of up to $350.0 million. The final maturity of the Credit Facility will occur on April 7, 2026.

On June 2, 2021, June 21, 2021, August 20, 2021 and September 16, 2021, the Company entered into First, Second, Third and Fourth Amendments (together the “Amendments”) to the Credit Agreement. The Amendments (i) provided for the issuance of a senior secured term loan under the Credit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of the Company’s cloud fax business into a new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement.

The Bridge Loan Facility bore interest at a rate per annum equal to (i) initially upon funding of the loan, either a base rate plus 2.00%, or a LIBOR rate plus 3.00%, (ii) from six months after the funding date of the Bridge Loan Facility until twelve months after the funding date of the Bridge Loan Facility, either a base rate plus 2.50%, or a LIBOR rate plus 3.50%, and (iii) from twelve months after the funding date of the Bridge Loan Facility until repayment of the Bridge Loan Facility, either a base rate plus 3.00% or a LIBOR rate plus 4.00%. The Bridge Loan Facility was to mature on the date that is 364 days after the funding date of the Bridge Loan Facility, with two automatic extensions, each for an additional three months, if SEC approval of the spin-off transaction was still outstanding. As of September 30, 2021, the Company had drawn on the full amount of the Bridge Loan Facility with $485.0 million outstanding. The proceeds of the Bridge Loan Facility were used to redeem the Company’s 3.25% Convertible Notes. As of September 30, 2021, the estimated fair value of the Bridge Loan Facility was $485.0 million. Refer to Note 18 - Subsequent Events for information on the extinguishment of the Bridge Loan subsequent to September 30, 2021 in connection with the spin-off of the cloud fax business.

The Company was required to pay a funding fee of 0.50% of the aggregate principal amount of Bridge Loan Facility made on the funding date thereof, as well as a duration fee of 0.25% of the aggregate principal amount of outstanding Bridge Loans on the sixth month anniversary of the funding of the Bridge Loans, and a fee of 0.50% of the aggregate principal amount of outstanding Bridge Loans on each of the nine-month, twelve-month and fifteen-month anniversaries of the funding of the Bridge Loans.

Paycheck Protection Program Loan

Through the acquisition of certain businesses in 2020, the Company acquired $0.9 million of outstanding debt originating from the Paycheck Protection Program. During the second quarter of 2021, the Company received approval from the SBA to forgive the entire amount of the outstanding PPP loans, which was subsequently forgiven in full.

10.Leases

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

For the first nine months of 2021, the Company recorded impairments of $9.4 million on its operating lease right of use assets primarily related to exiting certain lease space as the Company regularly evaluates its office space requirements in light more of its workforce working from home as part of a permanent “remote” or “partial remote” work model. During the third quarter of 2020, the Company had also decided to exit and seek subleases for certain leased facilities in the Digital Media reportable segment primarily also due to work from home models. The Company recorded a non-cash impairment charge of $9.8 million related to operating lease right-of-use assets for the affected facilities and an impairment charge of $3.6 million for associated property and equipment. The impairments were determined by comparing the fair value of the impacted right-of-use asset to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment. The fair value of the right-of-use asset was based on the estimated sublease income for the affected facilities taking into consideration the time it will take to obtain a sublease tenant, the applicable discount rate and the sublease rate which represent Level 3 unobservable inputs. The impairments are presented in general and administrative expenses on the Condensed Consolidated Statements of Operations.

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

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Finance leases are not material to the Company’s Condensed Consolidated Financial Statements and are therefore not included in the disclosures below.

The components of lease expense were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating lease cost	$	6,173	$	16,888	$	23,976	$	33,106
Short-term lease cost	712		264		2,653		1,357
Total lease cost	$	6,885	$	17,152	$	26,629	$	34,463

Supplemental balance sheet information related to leases was as follows (in thousands):

	September 30, 2021		December 31, 2020
Operating leases
Operating lease right-of-use assets	$	88,331	$	105,845
Total operating lease right-of-use assets	$	88,331	$	105,845
Operating lease liabilities, current	$	31,636	$	32,211
Operating lease liabilities, noncurrent	84,519		99,177
Total operating lease liabilities	$	116,155	$	131,388

Supplemental cash flow information related to leases was as follows (in thousands):

	Nine Months Ended September 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	21,869	$	21,764
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	9,274	$	7,968

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Other supplemental operating lease information consists of the following:

	September 30, 2021		December 31, 2020
Operating leases:
Weighted average remaining lease term	5.1 years		5.2 years
Weighted average discount rate	3.83	%	3.93	%

Maturities of operating lease liabilities as of September 30, 2021 were as follows (in thousands):

	Operating Leases
Fiscal Year:
2021 (remainder)	$	8,507
2022	31,926
2023	26,494
2024	18,840
2025	10,496
Thereafter	35,250
Total lease payments	$	131,513
Less: Imputed interest	15,358
Present value of operating lease liabilities	$	116,155

Total sublease income for the three months ended September 30, 2021 and 2020 was $0.5 million and $0.4 million, respectively, and was $1.4 million and $2.2 million for the nine months ended September 30, 2021 and 2020, respectively. Total estimated aggregate sublease income to be received in the future is $5.2 million.

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

Significant Judgments

Discount Rate

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

Options

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

Practical Expedients

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

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

•not reassess whether expired or existing contracts contain leases under the new definition of a lease;

•not reassess lease classification for expired or existing leases; and

•not reassess whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.

11.Commitments and Contingencies

Litigation

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

On January 21, 2016, Davis Neurology, P.A. filed a putative class action lawsuit against two Company affiliates in the Circuit Court for the County of Pope, State of Arkansas (58-cv-2016-40), alleging violations of the TCPA. The case was removed to the U.S. District Court for the Eastern District of Arkansas (No. 4:16-cv-00682). On March 20, 2017, the District Court granted a motion for judgment on the pleadings filed by the Company affiliates and dismissed all claims against the Company affiliates. On July 23, 2018, the Eighth Circuit Court of Appeals vacated the judgment and remanded to district court with instructions to return the case to state court. On January 29, 2019, after further appeals were exhausted, the case was remanded to the Arkansas state court. On April 1, 2019, the state court granted a motion for class certification filed by the plaintiff in 2016. Because the prior removal to federal court had deprived the state court of jurisdiction, the Company affiliates had not yet filed an opposition brief to the 2016 motion when the state court granted the motion. The Company affiliates appealed the order. On July 15, 2019, the Company affiliates removed the case to federal court pursuant to the Class Action Fairness Act of 2005. On November 26, 2019 the court denied the Plaintiff’s motion to remand. On December 20, 2019, the court granted the Plaintiff’s motion for leave to amend its complaint. On May 21, 2020, the court denied the Company affiliates’ motion to dismiss. On February 18, 2021, the parties filed a motion for preliminary approval of the class settlement, certification of a settlement class and for permission to disseminate notice, which was granted on May 11, 2021. On September 3, 2021, the court granted final approval of the class settlement.

On July 8, 2020, Jeffrey Garcia filed a putative class action lawsuit against the Company in the Central District of California (20-cv-06906), alleging violations of federal securities laws. The Company has moved to dismiss the consolidated class action complaint. The court granted the motion to dismiss and the plaintiff has filed an amended complaint. The Company has moved to dismiss the amended complaint.

On September 24, 2020, International Union of Operating Engineers of Eastern Pennsylvania and Delaware filed an action lawsuit in the Delaware Court of Chancery (C.A. No. 2020-0819-VCL) asserting derivative claims for breach of fiduciary duty and related theories against directors of the Company and other third parties relating generally the investment by the Company in OCV Fund I, L.P. (the “Chancery Court Derivative Action”). On November 17, 2020, the court entered an order allowing Orlando Police Pension Fund to intervene as a plaintiff in the case. The parties have reached an agreement to settle the lawsuit, which requires court approval. On July 29, 2021, the parties filed a stipulation of settlement that provides the terms of the settlement and begins the settlement approval process with the Court.

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

On March 24, 2021, Fritz Ringling filed a lawsuit in the District of Delaware (21-cv-00421-UNA) asserting substantially similar derivative claims, and on April 8, 2021, the district court consolidated the two actions under the caption In re J2 Global Stockholder Derivative Litigation. No.: 20-cv-01687-LPS. As part of the settlement of the Chancery Court Derivative Action described above, the Company and its directors and officers intend to defend against the remaining claims.

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

The Company has not accrued for any material loss contingencies relating to these legal proceedings because materially unfavorable outcomes are not considered probable by management. It is the Company’s policy to expense as incurred legal fees related to various litigations.

Non-Income Related Taxes

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

The Company is currently under audit or is subject to audit for indirect taxes in various states, municipalities and foreign jurisdictions. The Company has a $24.4 million reserve established for these matters. It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a material impact to our financial results.

12.Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate adjusted for discrete interim period tax impacts. Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. The Company’s effective tax rate was 16.6% and 28.3% for the three months ended September 30, 2021 and 2020, respectively and 12.3% and 32.2% for the nine months ended September 30, 2021 and 2020, respectively. The Company’s decreased rate during the three and nine months ended September 30, 2021 is primarily due to the recognition of a tax benefit from the disposition and impairment of the backup business to business unit and a reduction in our net reserve for uncertain tax positions with no similar events for the period ending September 30, 2020. During the nine months ended September 30, 2020 the Company recognized an increase in tax expense related to establishing a valuation allowance on deferred tax assets related to the impairment of certain investments with no similar events for the period ending September 30, 2021. During the three and nine months ended September 30, 2021, in connection with the redemption of the 3.25% Convertible Notes, the Company recorded a reduction in its deferred tax liabilities and an increase in additional paid-in capital of approximately $44.2 million. As the redemption of the 3.25% Convertible Notes were settled in cash and equity for an amount in excess of the Company’s tax basis in the 3.25% Convertible Notes, the deferred tax liability was reversed with an adjustment to additional-paid-in capital. Prior to the redemption, the Company had a deferred tax liability on the 3.25% Convertible Notes for cumulative book-tax temporary differences related to interest expense that resulted in the tax basis exceeding the financial statement carrying amount of the 3.25% Convertible Notes.

Income (loss) before income taxes included income from domestic operations of $29.2 million and $32.2 million for the nine months ended September 30, 2021 and 2020, respectively, and income from foreign operations of $107.1 million and $120.2 million for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021 and December 31, 2020, the Company had $54.2 million and $57.1 million, respectively, in liabilities for uncertain income tax positions. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s consolidated statement of operations.

Cash paid for income taxes net of refunds received was $51.8 million and $33.5 million for the nine months ended September 30, 2021 and 2020, respectively.

Certain taxes are prepaid during the year and, where appropriate, included within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheet. The Company’s prepaid taxes were $12.6 million and $3.0 million at September 30, 2021 and December 31, 2020, respectively.

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Income Tax Audits:

The Company is in various stages of audit by the U.S. Internal Revenue Service (“IRS”) for its 2012 through 2016 tax years. On February 24, 2021, the Company received a Notice of Deficiency for tax years 2012 through 2014 which disallowed certain deductions for domestic production. The Company disagrees with the Notice and filed a petition to appeal on May 24, 2021. As of September 30, 2021, the audits are ongoing.

The Company is under income tax audit by the California Franchise Tax Board (the “FTB”) for its tax years 2012 and 2013. The FTB, however, has suspended its audit for 2012 and 2013 pending the outcome of the IRS audit for such tax years. In August 2018, the FTB notified the Company that it will commence an audit of tax years 2015 and 2016. As of September 30, 2021, the audits are ongoing.

In June 2019, the New York State Department of Taxation and Finance (“NYS”) notified the Company that it will commence an audit for tax year 2015. In April 2020, the NYS notified the Company that it will also commence an audit for tax years 2016 and 2017. As of September 30, 2021, the audits are ongoing.

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

13.Stockholders’ Equity

Common Stock Repurchase Program

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

In November 2018 and May 2019, the Company entered into Rule 10b5-1 trading plans with a broker to facilitate the repurchase program. 600,000 shares were repurchased under the share repurchase program in 2018 at an aggregate cost of $42.5 million and were subsequently retired in March 2019. During the year ended December 31, 2019, the Company repurchased 197,870 shares at an aggregate cost of $16.0 million which were subsequently retired in the same year. During the year ended December 31, 2020, the Company repurchased 1,140,819 shares under this program at an aggregate cost of $87.5 million, which were subsequently retired in the same year. As of December 31, 2020, all the available shares were repurchased under the 2012 Program at an aggregate cost of $204.6 million (including an immaterial amount of commission fees).

On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to ten million shares of our common stock through August 6, 2025 (the “2020 Program”) in addition to the five million shares repurchased under the 2012 Program. The Company entered into a Rule 10b5-1 trading plan and during the nine month period ended September 30, 2021, the Company repurchased no shares under this program. Cumulatively at September 30, 2021, 2,490,599 shares were repurchased at an aggregate cost of $177.8 million (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired.

In connection with the Consensus spin-off, the Company called its 3.25% Convertible Notes for redemption and during the three and nine months ended September 30, 2021, the Company issued 3,031,817 and 3,050,850 shares of the Company’s common stock, respectively, in connection with that redemption (see Note 9 - Debt).

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Periodically, participants in the Company’s stock plans surrender to the Company shares of stock to pay the exercise price or to satisfy tax withholding obligations arising upon the exercise of stock options or the vesting of restricted stock. During the three month period ended September 30, 2021, the Company purchased 49,641 shares from plan participants for this purpose.

Dividends

No dividends were declared in during fiscal year 2021 and 2020. Future dividends are subject to Board approval. Based on the significant number of current investment opportunities within the Company’s portfolio of businesses and the historic returns from prior investments, the Board of Directors suspended dividend payments for the foreseeable future.

14.Stock Options and Employee Stock Purchase Plan

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

The 2007 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. 4,500,000 shares of the Company’s common stock are authorized to be used for 2007 Plan purposes. Options under the 2007 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the fair market value of the Company’s common stock on the date of grant for incentive stock options and not less than 85% of the fair market value of the Company’s common stock on the date of grant for non-statutory stock options. As of September 30, 2021, 7,000 shares underlying options and zero shares of restricted units were outstanding under the 2007 Plan. The 2007 Plan terminated on February 14, 2017.

The 2015 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units and other share-based awards. 4,200,000 shares of the Company’s common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of the Company’s common stock subject to the option on the date the option is granted. As of September 30, 2021, 400,000 shares underlying options and 246,018 shares of restricted stock units were outstanding under the 2015 Plan.

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

Stock Options

The following table represents stock option activity for the nine months ended September 30, 2021:

	Number of Shares	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021	475,601	$	69.61
Granted	—	—
Exercised	(68,601)	42.08
Canceled	—	—
Outstanding at September 30, 2021	407,000	$	74.25	6.2	$	25,385,630
Exercisable at September 30, 2021	157,000	$	73.00	6.0	$	9,988,130
Vested and expected to vest at September 30, 2021	346,640	$	74.11	6.1	$	21,668,058

The total intrinsic values of options exercised during the nine months ended September 30, 2021 and 2020 were $5.6 million and $3.0 million, respectively.

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The Company recognized $0.2 million and $0.2 million of compensation expense related to stock options for the three months ended September 30, 2021 and 2020, respectively, and $0.6 million and $0.7 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021 and December 31, 2020, unrecognized stock compensation related to non-vested stock options granted under each of the share-based compensation plans approximated $5.1 million and $5.8 million, respectively. Unrecognized stock compensation expense related to non-vested stock options granted under these plans is expected to be recognized ratably over a weighted-average period of 4.3 (i.e., the remaining requisite service period).

Fair Value Disclosure

The Company uses the Black-Scholes option pricing model to calculate the fair value of each option grant. The expected volatility is based on historical volatility of the Company’s common stock. The Company estimates the expected term based upon the historical exercise behavior of its employees. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 12.4% and 11.8% as of September 30, 2021 and 2020, respectively.

 Restricted Stock and Restricted Stock Units

The Company has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to certain share-based compensation plans. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, four or five years for senior staff (excluding market-based awards discussed below) and eight years for the Chief Executive Officer.

Restricted Stock and Restricted Stock Units with Market Conditions

The Company has awarded certain key employees market-based restricted stock and restricted stock units pursuant to the 2015 Plan. The market-based shares have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20-day and 30-day lookback (trading days). Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the nine months ended September 30, 2021 and 2020, the Company awarded 73,094 and 82,112 market-based shares, respectively. The per share weighted average grant-date fair values of the market-based shares granted during the nine months ended September 30, 2021 and 2020 were $94.40 and $70.99, respectively.

The weighted-average fair values of market-based shares granted have been estimated utilizing the following assumptions:

	September 30, 2021			September 30, 2020
Underlying stock price at valuation date	$	113.27		$	91.17
Expected volatility	30.3		%	27.0		%
Risk-free interest rate	1.3		%	0.7		%

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Restricted stock award activity for the nine months ended September 30, 2021 is set forth below:

	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2021	820,566	$	62.66
Granted	—	—
Vested	(421,923)	62.47
Canceled	(3,277)	82.96
Nonvested at September 30, 2021	395,366	$	61.62

Restricted stock unit award activity for the nine months ended September 30, 2021 is set forth below:

	Number of Shares	Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021	209,784
Granted	164,257
Vested	(124,761)
Canceled	(3,262)
Outstanding at September 30, 2021	246,018	3.2	$	33,610,979
Vested and expected to vest at September 30, 2021	170,143	2.5	$	23,244,890

The Company recognized $5.7 million and $5.1 million of compensation expense related to restricted stock, restricted stock units and market-based awards for the three months ended September 30, 2021 and 2020, respectively, and $16.4 million and $16.4 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021 and December 31, 2020, the Company had unrecognized share-based compensation cost of approximately $37.3 million and $38.6 million, respectively, associated with these awards. This cost is expected to be recognized over a weighted-average period of 3.6 for awards and 4.1 for units.

Employee Stock Purchase Plan

The Purchase Plan provides for the issuance of a maximum of two million shares of the Company’s common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of the Company’s common stock at certain plan-defined dates. The price of the Company’s common stock purchased under the Purchase Plan for the offering periods is equal to 85% of the lesser of the fair market value of a share of common stock of the Company on the beginning or the end of the offering period.

The Company determined that a plan provision exists which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the ESPP. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 11.15% and 16.50% as of September 30, 2021 and 2020, respectively. The increase in forfeiture rate comes as a result of the Purchase Plan being offered to all employees regardless of employment location.

For the nine months ended September 30, 2021 and 2020, 58,145 and 53,694 shares were purchased under the Purchase Plan, respectively. Cash received upon the issuance of the Company’s common stock under the Purchase Plan was $4.2 million and $3.3 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, 1,346,794 shares were available under the Purchase Plan for future issuance.

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The Company recognized $0.8 million and $0.5 million of compensation expense related to the Purchase Plan for the three months ended September 30, 2021 and 2020, respectively, and $2.1 million and $1.5 million for the nine months ended September 30, 2021 and 2020, respectively.

The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions:

	September 30, 2021	September 30, 2020
Risk-free interest rate	0.06%	0.13%
Expected term (in years)	0.5	0.5
Dividend yield	0.00%	0.00%
Expected volatility	35.62%	23.95%
Weighted average volatility	35.62%	23.95%

15.Earnings Per Share

The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator for basic and diluted net income per common share:
Net income	$	42,569	$	60,883	$	136,209	$	92,580
Net income available to participating securities (a)	(28)		(89)		(143)		(477)
Net income available to the Company’s common shareholders	$	42,541	$	60,794	$	136,066	$	92,103
Denominator:
Weighted-average outstanding shares of common stock	46,738,073		46,279,515		45,258,819		46,914,750
Dilutive effect of:
Equity incentive plans	332,532		29,557		272,178		23,211
Convertible debt (b)	1,511,980		—		2,034,065		682,347
Common stock and common stock equivalents	48,582,585		46,309,072		47,565,062		47,620,308
Net income per share:
Basic	$	0.91	$	1.31	$	3.01	$	1.96
Diluted	$	0.88	$	1.31	$	2.86	$	1.93

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

(b)Represents the incremental shares issuable upon conversion of the 3.25% Convertible Notes due June 15, 2029 (subsequently redeemed in full) and 1.75% Convertible Notes due November 1, 2026 by applying the treasury stock method when the average stock price exceeds the conversion price of the Convertible Notes (see Note 9 - Debt).

For the three months ended September 30, 2021 and 2020, there were zero and 423,000 options outstanding, respectively, and for the nine months ended September 30, 2021 and 2020, there were zero options outstanding, respectively, which were excluded from the computation of diluted earnings per share because the exercise prices were greater than the average market price of the common stock.

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16.Segment Information

The Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”) for making operating and investment decisions and for assessing performance. The CODM views the Company as two businesses: Digital Media and Cloud Services. However, in accordance with the aggregation criteria within ASC Topic 280, the Company’s operating segments have been aggregated into three reportable segments: (i) Digital Media; (ii) Voice, Backup, Security, and Consumer Privacy and Protection; and (iii) Fax and Martech.

The Company’s Digital Media business is driven primarily by advertising and subscription revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter. The Company’s Cloud Services business is driven primarily by subscription revenues that are relatively higher margin, stable and predictable from quarter to quarter with minor seasonal weakness in the fourth quarter.

The accounting policies of the businesses are the same as those described in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021. The Company evaluates performance based on revenue, gross margin and profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses.

Information on reportable segments and reconciliation to consolidated income from operations is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue by reportable segment:
Digital Media	$	262,429	$	186,784	$	743,280	$	513,462
Cloud Services
Fax and Martech	114,648		98,044		320,829		286,687
Voice, Backup, Security, and CPP	67,531		72,204		208,137		220,403
Cloud Services Total	182,179		170,248		528,966		507,090
Elimination of inter-segment revenues	(356)		(56)		(766)		(200)
Total segment revenues	444,252		356,976		1,271,480		1,020,352
Corporate (1)	—		—		—		1
Total revenues	$	444,252	$	356,976	$	1,271,480	$	1,020,353
Gross profit by reportable segment:
Digital Media	$	238,650	$	169,394	$	673,409	$	457,963
Cloud Services
Fax and Martech	91,993		81,435		261,742		238,149
Voice, Backup, Security, and CPP	49,395		50,392		151,155		152,733
Cloud Services Total	141,388		131,827		412,897		390,882
Elimination of inter-segment gross profit	(88)		(56)		(214)		(200)
Total segment gross profit	379,950		301,165		1,086,092		848,645
Corporate (1)	—		(11)		(74)		(47)
Total gross profit	$	379,950	$	301,154	$	1,086,018	$	848,598
Direct costs by reportable segment (2):
Digital Media (3)	$	188,950	$	143,312	$	548,960	$	410,109
Cloud Services
Fax and Martech (3)	42,057		28,614		107,109		89,121
Voice, Backup, Security, and CPP (3)	37,524		37,456		150,102		118,291
Cloud Services Total	79,581		66,070		257,211		207,412
Elimination of inter-segment direct costs	(88)		(56)		(214)		(200)
Total segment direct costs	268,443		209,326		805,957		617,321

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Corporate (1)	15,366		14,390		43,785		25,552
Total direct costs (2)	$	283,809	$	223,716	$	849,742	$	642,873
Operating income by reportable segment:
Digital Media	$	49,700	$	26,082	$	124,449	$	47,854
Cloud Services
Fax and Martech	49,936		52,821		154,633		149,028
Voice, Backup, Security, and CPP	11,871		12,936		1,053		34,442
Cloud Services Total	61,807		65,757		155,686		183,470
Total segment operating income	111,507		91,839		280,135		231,324
Corporate (1)	(15,366)		(14,401)		(43,859)		(25,599)
Total income from operations	$	96,141	$	77,438	$	236,276	$	205,725
(1) Corporate includes costs associated with general and administrative and other expenses that are managed on a global basis and that are not directly attributable to any particular segment.
(2) Direct costs for each segment include other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expense, depreciation and amortization and other administrative expenses.
(3) Beginning in the third quarter of 2020, certain expenses associated with Corporate that were previously allocated to the Cloud Services business and the Digital Media business for shared costs incurred by Corporate were no longer allocated. Table above has been recast to remove the impact of certain expenses associated with Corporate that were previously allocated to the Cloud Services and Digital Media businesses.

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The CODM does not use Balance Sheet and Cash Flow information in connection with operating and investment decisions other than as presented for Digital Media and Cloud Services. Accordingly, the following segment information is presented for Digital Media and Cloud Services.

	September 30, 2021		December 31, 2020
Assets:
Digital Media	$	1,978,252	$	2,088,397
Cloud Services	1,567,119		1,473,398
Total assets from Digital Media and Cloud Services	3,545,371		3,561,795
Corporate	285,286		103,536
Total assets	$	3,830,657	$	3,665,331
	Nine Months Ended September 30,
	2021		2020
Capital expenditures:
Digital Media	$	51,995	$	43,593
Cloud Services	35,500		27,673
Total capital expenditures from Digital Media and Cloud Services	87,495		71,266
Corporate	—		—
Total capital expenditures	$	87,495	$	71,266

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Depreciation and amortization:
Digital Media	$	50,056	$	36,651	$	147,482	$	101,771
Cloud Services	16,082		20,524		48,744		58,355
Total depreciation and amortization from Digital Media and Cloud Services	66,138		57,175		196,226		160,126
Corporate	79		2,437		217		3,554
Total depreciation and amortization	$	66,217	$	59,612	$	196,443	$	163,680

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The Company maintains operations in the U.S., Canada, Ireland, Japan and other countries. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on jurisdictions where revenues are reported (in thousands).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
United States	$	366,778	$	296,054	$	1,018,277	$	827,520
Canada	19,574		17,728		59,957		51,298
Ireland	13,980		14,947		59,227		40,520
All other countries	43,920		28,247		134,019		101,015
	$	444,252	$	356,976	$	1,271,480	$	1,020,353

	September 30, 2021		December 31, 2020
Long-lived assets:
United States	$	834,129	$	918,125
All other countries	46,815		54,073
Total	$	880,944	$	972,198

17.Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the three months ended September 30, 2021 (in thousands):

	Unrealized Gains (Losses) on Investments		Foreign Currency Translation		Total
Beginning balance	$	283	$	(60,257)	$	(59,974)
Other comprehensive income	(114)		(11,101)		(11,215)
Net current period other comprehensive income	(114)		(11,101)		(11,215)
Ending balance	$	169	$	(71,358)	$	(71,189)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the nine months ended September 30, 2021 (in thousands):

	Unrealized Gains (Losses) on Investments		Foreign Currency Translation		Total
Beginning balance	$	283	$	(55,089)	$	(54,806)
Other comprehensive loss	(114)		(16,269)		(16,383)
Net current period other comprehensive loss	(114)		(16,269)		(16,383)
Ending balance	$	169	$	(71,358)	$	(71,189)

There were no reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2021.

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18.Subsequent Events

Consensus, Inc. Spin-Off

On October 7, 2021, the Separation of Consensus into an independent publicly traded company was completed and the Company transferred J2 Cloud Service, LLC to Consensus, Inc. who in turn transferred non-fax assets and liabilities back to Ziff Davis such that Consensus was left with the cloud fax business. The Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution. The Company’s stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock. On October 8, 2021, Consensus began trading on Nasdaq under the stock symbol “CCSI”. Ziff Davis, Inc. (“Ziff Davis”) (formerly J2 Global, Inc.) retained a 19.9% interest in Consensus following the Separation.

On October 7, 2021, in exchange for the equity interest in Consensus, Consensus paid Ziff Davis approximately $269.6 million of cash and issued $500.0 million of senior notes due 2028 to Ziff Davis and Ziff Davis exchanged such notes with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A. and MUFG Union Bank, N.A., as administrative agent for the lenders, in exchange for extinguishment of the $485.0 million of indebtedness outstanding under the Bridge Loan Facility (Refer to Note 9 - Debt). Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A.

On October 8, 2021, Ziff Davis announced that it had accepted tender offers to purchase $83.3 million in aggregate principal of its 4.625% Senior Notes for an aggregate purchase price of $90.0 million. The tender offer expired on October 22, 2021.

Corporate Name Change

On October 7, 2021, in connection with the spin-off of its cloud fax business discussed above, the Company changed its name from J2 Global, Inc. to Ziff Davis, Inc. Starting October 8, 2021, the Company’s common stock began trading under the stock symbol “ZD.”

Leadership Changes

In connection with the Separation, each of Doug Bech, Stephen Ross and Pamela Sutton-Wallace resigned as members of the Company’s board of directors, effective as of immediately prior to the Separation, to serve as directors of Consensus. Additionally, Scott Turicchi resigned as President and Chief Financial Officer, effective as of immediately prior to the effectiveness of the Separation. Mr. Turicchi serves as Chief Executive Officer of Consensus. On October 7, 2021, Steve Dunn was appointed the interim principal financial officer of Ziff Davis while Ziff Davis is engaging in a search process for a new chief financial officer.

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

Forward-Looking Information

In addition to historical information, we have also made forward-looking statements in this report. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words “anticipates,” “believes,” “estimates,” “hopes” or similar expressions. 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, 2020 (together, the “Risk Factors”), and the factors discussed in the section in this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures About Market Risk.” Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the Risk Factors and the risk factors set forth in other documents we file from time to time with the SEC.

Some factors that could cause actual results to differ materially from those anticipated in these forward-looking statements include, but are not limited to, our ability and intention to:

◦Sustain growth or profitability, particularly in light of an uncertain U.S. or worldwide economy and the related impact on customer acquisition and retention rates, customer usage levels, and credit and debit card payment declines;

◦Maintain and increase our customer base and average revenue per user;

◦Generate sufficient cash flow to make interest and debt payments, reinvest in our business, and pursue desired activities and businesses plans while satisfying restrictive covenants relating to debt obligations;

◦Acquire businesses on acceptable terms and successfully integrate and realize anticipated synergies from such acquisitions;

◦Continue to expand our businesses and operations internationally in the wake of numerous risks, including adverse currency fluctuations, difficulty in staffing and managing international operations, higher operating costs as a percentage of revenues, or the implementation of adverse regulations;

◦Maintain our financial position, operating results and cash flows in the event that we incur new or unanticipated costs or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added and telecommunication taxes;

◦Accurately estimate the assumptions underlying our effective worldwide tax rate;

◦Maintain favorable relationships with critical third-party vendors whose financial condition will not negatively impact the services they provide;

◦Create compelling digital media content causing increased traffic and advertising levels; additional advertisers or an increase in advertising spend; and effectively target digital media advertisements to desired audiences;

◦Manage certain risks inherent to our business, such as costs associated with fraudulent activity, system failure or security breach; effectively maintaining and managing our billing systems; time and resources required to manage our legal proceedings; liability for legal and other claims; or adhering to our internal controls and procedures;

◦Compete with other similar providers with regard to price, service, and functionality;

◦Cost-effectively procure, retain and deploy large quantities of telephone numbers in desired locations in the United States and abroad;

◦Achieve business and financial objectives in light of burdensome domestic and international telecommunications, internet or other regulations, including regulations related to data privacy, access, security, retention, and sharing;

◦Successfully manage our growth, including but not limited to our operational and personnel-related resources, and integration of newly acquired businesses;

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◦Successfully adapt to technological changes and diversify services and related revenues at acceptable levels of financial return;

◦Successfully develop and protect our intellectual property, both domestically and internationally, including our brands, patents, trademarks and domain names, and avoid infringing upon the proprietary rights of others;

◦Recruit and retain key personnel; and

◦Realize the expected benefits of the cloud fax spin-off transaction or the sale of the B2B Backup business.

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 including the COVID-19 outbreak and other catastrophic events outside of our control, including as to COVID-19 the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties and us.

Overview

As of September 30, 2021, Ziff Davis, Inc., together with its subsidiaries (“Ziff Davis”, “our”, “us” or “we”), was a leading provider of internet information and services. The Digital Media business specialized in the technology, shopping, gaming, and healthcare markets, offering content, tools and services to consumers and businesses. The Cloud Services business provided cloud-based subscription services to consumers and businesses including cloud fax, cybersecurity, privacy and marketing technology.

In February 2021, we sold certain Voice assets in the United Kingdom and in September 2021, we sold our B2B Backup business. On October 7, 2021 subsequent to the end of the third quarter of 2021, the spin-off of the cloud fax business into an independent public company (Consensus) was completed. We believe the spin-off will enable the independent companies to create value with distinct management teams, capital structures and strategic focus.

Our Digital Media business generates revenues from advertising and sponsorships, subscription and usage fees, performance marketing and licensing fees. Our Cloud Services business generates revenues primarily from customer subscription and usage fees.

In addition to growing our business organically, on a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel and enter into new markets.

Our consolidated revenues are currently generated from three basic business models, each with different financial profiles and variability. Our Digital Media business is driven primarily by advertising revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter. Our Cloud Services business is driven primarily by subscription revenues that are relatively higher margin, stable and predictable from quarter to quarter with some minor seasonal weakness in the fourth quarter. We continue to pursue additional acquisitions, which may include companies operating under business models that differ from those we operate under today. Such acquisitions could impact our consolidated profit margins and the variability of our revenues.

Ziff Davis, Inc. (formerly J2 Global, Inc.) was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure, and our Cloud Services business, operated by our wholly owned subsidiary, J2 Cloud Services, LLC (formerly J2 Cloud Services, Inc.), and its subsidiaries, was founded in 1995.

Digital Media Performance Metrics

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

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We define a visit as a group of interactions by users with our mobile and desktop applications and websites. A single visit can contain multiple page views and actions, and a single user can open multiple visits across domains, web browsers, desktop or mobile devices. We measure visits with Google Analytics and through partner platform measures. Page views are measured each time a page on our websites is loaded in a browser.

The following table sets forth certain key operating metrics for our Digital Media business for the three and nine months ended September 30, 2021 and 2020 (in millions):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020 (1)	2021 (1)	2020 (1)
Visits	2,047	2,197	6,454	6,701
Page views	7,006	7,167	22,038	21,887

Sources: Google Analytics and Partner Platforms and test results in connection with Ookla

(1) To more accurately reflect customer activity at Ookla, we have shifted to using tests as the basis instead of Google Analytics, resulting in pro-forma adjustments to data in 2020 and Q1 2021.

Cloud Services Performance Metrics

We use certain metrics to generally assess the operational and financial performance of our Cloud Services business; these metrics also serve as a baseline for (a) internal trends and (b) benchmarking against competitors. The average monthly revenue per customer can be used as an analytical tool in determining the marginal economics of customer acquisition, which is particularly useful as we continue to focus on growing our higher-margin businesses. We also use this metric, in conjunction with the cancel rate, to help provide a directional indicator of Cloud Services revenue and calculate the lifetime value of customers within each of our business units.

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The following table sets forth certain key operating metrics for our Cloud Services business as of and for the three and nine months ended September 30, 2021 and 2020 (in thousands, except for percentages):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Subscriber revenues:
Fixed (1)	$	152,359		$	144,525		$	444,397		$	426,766
Variable (1)	29,639			25,708			84,079			80,255
Total subscriber revenues	$	181,998		$	170,233		$	528,476		$	507,021
Other license revenues	92			15			275			69
Total revenues	$	182,090		$	170,248		$	528,751		$	507,090
Percentage of total subscriber revenues:
Fixed	83.7		%	84.9		%	84.1		%	84.2		%
Variable	16.3		%	15.1		%	15.9		%	15.8		%
Total revenues:
Number-based	$	98,652		$	98,000		$	293,167		$	289,502
Non-number-based	83,438			72,248			235,584			217,588
Total revenues	$	182,090		$	170,248		$	528,751		$	507,090
Average monthly revenue per Cloud Business Customer (ARPU) (2)(3)	$	15.53		$	13.98
Cancel Rate (4)	2.1		%	2.1		%

(1)The first quarter 2020 disclosure of $144.8 million in fixed subscriber revenue included $3.3 million of revenue which was subsequently determined to be variable subscriber revenue. As a result, the fixed and variable subscriber revenue have been corrected in the table above.

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

(3)Cloud Services customers are defined as paying direct inward dialing numbers for fax and voice services, and direct and resellers’ accounts for other services.

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

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 2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021. During the three months ended September 30, 2021, there were no significant changes in our critical accounting policies and estimates.

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Results of Operations for the Three and Nine Months Ended September 30, 2021

Digital Media

We expect the revenue for the remainder of fiscal year 2021 to be higher compared to the prior-year comparable period due to the acquisition of RetailMeNot and organic growth, subject to the continued risk of the COVID-19 pandemic. We expect the Digital Media business to improve as we integrate our recent acquisitions and over the longer term as advertising transactions continue to shift from offline to online, but these initiatives will be offset by the impact of COVID-19 in the near term. The main focus of our advertising programs is to provide relevant and useful advertising to visitors to our websites and those included within our advertising networks, reflecting our commitment to constantly improve their overall web experience. As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and those included within our advertising networks.

The operating margin we realize on revenues generated from ads placed on our websites is significantly higher than the operating margin we realize from revenues generated from those placed on third-party websites. Growth in advertising revenues from our websites has generally exceeded that from third-party websites. This trend has had a positive impact on our operating margins, and we expect that this will continue for the foreseeable future. However, the trend in advertising spend is shifting to mobile devices and other newer advertising formats which generally experience lower margins than those from desktop computers and tablets. We expect this trend to continue to put pressure on our margins.

We expect acquisitions to remain an important component of our strategy and use of capital in this business; however, we cannot predict whether our current pace of acquisitions will remain the same within this business, especially in light of the current macroeconomic conditions. In a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods. Moreover, future acquisitions of businesses within this space but with different business models may impact Digital Media’s overall profit margins.

Cloud Services

Excluding the impact of the spin-off of our cloud fax business, the sale of our backup business and assuming a stable or improving economic environment, and, subject to our risk factors, we expect 2021 revenue to be higher compared to the prior year. The main strategic focus of our Cloud Services offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity and security of our customers as the technologies and devices they use evolve over time. As a result, we expect to continue to take steps to enhance our existing offerings and offer new services to continue to satisfy the evolving needs of our customers.

On October 7, 2021, the Company completed the spin-off of its cloud fax business into an independent publicly traded company. This cloud fax business represented approximately 50% of our total Cloud revenues and approximately 31% of our total Cloud operating costs for the nine months ended September 30, 2021. As a result, we anticipate a reduction in our operating margins as the cloud fax business will not recur going forward.

We expect acquisitions to remain an important component of our strategy and use of capital in this business; however, we cannot predict whether our current pace of acquisitions will remain the same within this business, especially in light of the current macroeconomic conditions. In a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods. Moreover, future acquisitions of businesses within this space but with different business models may impact Cloud Services’ overall profit margins.

Consolidated

Excluding the impact of the spin-off of our fax business and based on the trends discussed above with respect to our Cloud Services and Digital Media businesses, we anticipate our consolidated revenue for fiscal year 2021 to be higher compared to the prior-year comparable period.

We expect operating profit as a percentage of revenues to generally decrease in the future primarily due to the fact that revenue with respect to our Digital Media business (i) is increasing as a percentage of our revenue on a consolidated basis and has historically operated at a lower operating margin; and (ii) the completion of the spin-off of our cloud fax business which historically operated at a higher operating margin than our remaining businesses.

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Revenues

(in thousands, except percentages)

	Three Months Ended September 30,		Percentage Change	Nine Months Ended September 30,		Percentage Change
	2021	2020		2021	2020
Revenues	$444,252	$356,976	24%	$1,271,480	$1,020,353	25%

Our revenues consist of revenues from our Digital Media and Cloud Services businesses. Digital Media revenues primarily consist of advertising revenues, subscriptions earned through the granting of access to, or delivery of, certain data products or services to customers, fees paid for generating business leads, and licensing and sale of editorial content and trademarks. Cloud Services revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services.

Our revenues in 2021 have increased over the comparable three and nine month periods of 2020 primarily due to a combination of acquisitions and organic growth; partially offset by declines in certain areas of both the Digital Media and Cloud Services businesses.

Cost of Revenues

(in thousands, except percentages)

	Three Months Ended September 30,		Percentage Change	Nine Months Ended September 30,		Percentage Change
	2021	2020		2021	2020
Cost of revenue	$64,302	$55,822	15%	$185,462	$171,755	8%
As a percent of revenue	14%	16%		15%	17%

Cost of revenues is primarily comprised of costs associated with content fees, editorial and production costs and hosting costs. The increase in cost of revenues for the three months ended September 30, 2021 was primarily due to higher content fees, campaign fulfillment and other editorial and production costs and increased hosting and other computer related costs. The increase in cost of revenues for the nine months ended September 30, 2021 was primarily due to higher content fees, editorial and production costs, hosting and computer related costs and increased depreciation.

Operating Expenses

Sales and Marketing.

(in thousands, except percentages)

	Three Months Ended September 30,		Percentage Change	Nine Months Ended September 30,		Percentage Change
	2021	2020		2021	2020
Sales and Marketing	$139,693	$95,074	47%	$394,981	$287,317	37%
As a percent of revenue	31%	27%		31%	28%

Our 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. Advertising cost for the three months ended September 30, 2021 was $72.8 million (primarily consists of $44.3 million of third-party advertising costs and $22.1 million of personnel costs) compared to the third quarter of 2020 of $35.4 million (primarily consists of $19.8 million of third-party advertising costs and $12.8 million of personnel costs. Advertising cost for the nine months ended September 30, 2021 was $205.2 million (primarily consists of $119.7 million of third-party advertising costs and $67.5 million of personnel costs) compared to 2020 of $108.0 million (primarily consists of $57.8 million of third-party advertising costs and $39.4 million of personnel costs). The increase in sales and marketing

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expenses for the three and nine months ended September 30, 2021 versus the prior comparable period was primarily due to increased creative services, sales, advertising operations, advertising and product development costs associated with the acquisition of businesses acquired in and subsequent to the third quarter 2020 within the Digital Media and Cloud Services businesses.

Research, Development and Engineering.

(in thousands, except percentages)

	Three Months Ended September 30,		Percentage Change	Nine Months Ended September 30,		Percentage Change
	2021	2020		2021	2020
Research, Development and Engineering	$21,639	$14,261	52%	$62,634	$43,273	45%
As a percent of revenue	5%	4%		5%	4%

Our research, development and engineering costs consist primarily of personnel-related expenses. The increase in research, development and engineering costs for the three and nine months ended September 30, 2021 versus the prior comparable period was primarily due to an increase in costs associated with businesses acquired in and subsequent to the third quarter 2020.

General and Administrative.

(in thousands, except percentages)

	Three Months Ended September 30,		Percentage Change	Nine Months Ended September 30,		Percentage Change
	2021	2020		2021	2020
General and Administrative	$122,477	$114,381	7%	$359,498	$312,283	15%
As a percent of revenue	28%	32%		28%	31%

Our general and administrative costs consist primarily of personnel-related expenses, depreciation and amortization, changes in the fair value associated with contingent consideration, share-based compensation expense, bad debt expense, professional fees, severance and insurance costs. The increase in general and administrative expense for the three and nine months ended September 30, 2021 versus the prior comparable period was primarily due to increased amortization of intangible assets, salary and related costs and professional fees.

Goodwill impairment on business. Our goodwill impairment on business is generated from the impairment of the B2B Backup business in the second quarter of 2021. Goodwill impairment on business was $32.6 million for the nine months ended September 30, 2021. See Note 6 - Dispositions from the footnotes to our Condensed Consolidated Financial Statements for additional information.

Share-Based Compensation

The following table represents share-based compensation expense included in cost of revenues and operating expenses in the accompanying Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (in thousands): 

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenues	$	108	$	136	$	357	$	413
Operating expenses:
Sales and marketing	427		321		1,160		1,135
Research, development and engineering	613		425		1,690		1,340
General and administrative	5,607		4,918		15,912		15,755
Total	$	6,755	$	5,800	$	19,119	$	18,643

Non-Operating Income and Expenses

Interest expense, net. Our interest expense, net is generated primarily from interest expense due to outstanding debt, partially offset by interest income earned on cash, cash equivalents and investments. Interest expense, net was $19.9 million and $22.7 million for the three months ended September 30, 2021 and 2020, respectively, and $62.8 million and $65.9 million for the nine months ended September 30, 2021 and 2020, respectively. Interest expense, net was lower due to the redemption of our 3.25% Convertible Notes on August 2, 2021.

Loss (gain) on sale of businesses. Loss on sale of businesses was $24.6 million during the three months ended September 30, 2021 and a gain of $17.1 million for the three months ended September 30, 2020. Loss on sale of businesses was $21.8 million during the nine months ended September 30, 2021 and a gain of $17.1 million for the nine months ended September 30, 2020. Our loss on the sale of business during the third quarter of 2021 was related to the sale of our B2B Back-up business. The loss on the sale of businesses during the nine months ended September 30, 2021 was due to the loss on the sale of the B2B Back-up business, partially offset by a gain on the sale of certain Voice assets in the United Kingdom in the first quarter of 2021 with a subsequent adjustment in the second quarter of 2021. See Note 6 - Dispositions from the footnotes to our Condensed Consolidated Financial Statements for additional information.

Loss on investments, net. Our loss on investments, net is generated from gains or losses from investments in equity and debt securities. Our loss on investments, net was zero and $0.2 million for the three months ended September 30, 2021 and 2020 and $16.7 million and $21.0 million for the nine months ended September 30, 2021 and 2020, respectively. Our loss on investments, net for the three months ended September 30, 2021 versus the prior comparable period was consistent. Our loss on investments, net decreased for the nine months ended September 30, 2021 versus the prior comparable period due to lower net losses realized on certain investments as a result of an impairment recognized in the current period and changes in the investee’s capital structure and overall market volatility recognized in the prior comparable period.

Other income (expense), net. Our other income (expense), net is generated primarily from miscellaneous items and gain or losses on currency exchange. Other income (expense), net was $1.7 million and $14.2 million for the three months ended September 30, 2021 and 2020, respectively and $1.4 million and $16.4 million for the nine months ended September 30, 2021 and 2020, respectively. Other income (expense), net changed for the three and nine months ended September 30, 2021 versus the prior comparable periods primarily due to changes in gain or losses on currency exchange.

Income Taxes

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

Provision for income taxes amounted to $8.8 million and $24.3 million for the three months ended September 30, 2021 and 2020, respectively, and $16.7 million and $49.0 million for the nine months ended September 30, 2021 and 2020, respectively. Our effective tax rate was 16.6% and 28.3% for the three months ended September 30, 2021 and 2020, respectively, and 12.3% and 32.2% for the nine months ended September 30, 2021 and 2020, respectively.

The decrease in our effective income tax rate for the three months ended September 30, 2021 was primarily attributable to the following:

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1.a decrease in tax expense during 2021 due to recognizing a current tax benefit related to the sale of the business-to-business backup business units; and

2.a decrease in tax expense due to increased tax benefits related to tax deductions for the vesting of restricted stock units and exercises of stock options; partially offset by

3.an increase in our effective income tax rate during 2021 for U.S. state and local taxes due to a greater portion of our income being subject to tax in the U.S.

The decrease in our effective income tax rate for the nine months ended September 30, 2021 was primarily attributable to the following:

1.a decrease in tax expense during 2021 due to recognizing a tax benefit related to the disposition of certain business units; and

2.a decrease in tax expense due to discrete tax benefits related to a reduction in our net reserve for uncertain tax positions with no similar events for the nine months ended September 30, 2020; partially offset by

3.an increase in our effective income tax rate during 2021 for U.S. state and local taxes due to a greater portion of our income being subject to tax in the U.S.

Significant judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis. We believe our tax positions, including intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business. Certain of these tax positions have in the past been, and are currently being, challenged, and this may have a significant impact on our effective tax rate if our tax reserves are insufficient.

Equity Method Investment

Income (loss) from equity method investment, net. Income (loss) from equity method investment, net is generated from our investment in the OCV Fund for which we receive annual audited financial statements. The investment in the OCV Fund is presented net of tax and on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

The income (loss) from equity method investment, net was $(1.9) million and $(0.7) million net of tax benefit (expense) for the three months ended September 30, 2021 and 2020, respectively, and $16.6 million and $(10.8) million, for the nine months ended September 30, 2021 and 2020, respectively. The nine months ended September 30, 2021 gain was primarily a result of a gain on the underlying investments. During the three months ended September 30, 2021 and 2020, the Company recognized management fees of $0.8 million and $0.8 million, net of tax benefit, respectively, and for the nine months ended September 30, 2021 and 2020, the Company recognized management fees of $2.3 million and $2.3 million, net of tax benefit, respectively.

Digital Media and Cloud Services Results

Our businesses are based on the organization structure used by management for making operating and investment decisions and for assessing performance and have been aggregated into two businesses: (i) Digital Media; and (ii) Cloud Services.

We evaluate the performance of our businesses based on revenues, including both external and interbusiness net sales, and operating income. We account for interbusiness sales and transfers based primarily on standard costs with reasonable mark-ups established between the businesses. Identifiable assets by business are those assets used in the respective business’ operations. Corporate assets consist of cash and cash equivalents, deferred income taxes and certain other assets. All significant interbusiness amounts are eliminated to arrive at our consolidated financial results.

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Digital Media

The following results are presented for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
External net sales	$	262,162	$	186,728	$	742,729	$	513,262
Inter-business net sales	267		56		551		200
Net sales	262,429		186,784		743,280		513,462
Cost of revenues	23,779		17,390		69,871		55,499
Gross profit	238,650		169,394		673,409		457,963
Operating expenses	188,950		143,312		548,960		410,109
Operating income	$	49,700	$	26,082	$	124,449	$	47,854

Digital Media’s net sales of $262.4 million for the three months ended September 30, 2021 increased $75.6 million, or 40.5%, from the prior comparable period primarily due to business acquisitions. Digital Media’s net sales of $743.3 million for the nine months ended September 30, 2021 increased $229.8 million, or 44.8%, from the prior comparable period primarily due to business acquisitions.

Digital Media’s gross profit of $238.7 million for the three months ended September 30, 2021 increased $69.3 million, or 40.9%, from the prior comparable period primarily due to business acquisitions. Digital Media’s gross profit of $673.4 million for the nine months ended September 30, 2021 increased $215.4 million, or 47.0%, from the prior comparable period primarily due to business acquisitions. Digital Media’s operating expenses of $189.0 million for the three months ended September 30, 2021 increased $45.6 million from the prior comparable period. Digital Media’s operating expenses of $549.0 million for the nine months ended September 30, 2021 increased $138.9 million from the prior comparable period. The increase in the three and nine months ended September 30, 2021 is primarily due to additional expense associated with businesses acquired in and subsequent to the prior comparable period including (a) additional salary and related costs including severance; (b) creative and selling costs; and (c) increased amortization of intangible assets.

As a result of these factors, Digital Media’s operating income of $49.7 million for the three months ended September 30, 2021 increased $23.6 million, or 90.6%, from the prior comparable period. Digital Media’s operating income of $124.4 million for the nine months ended September 30, 2021 increased $76.6 million, or 160.1%, from the prior comparable period.

Cloud Services

The following results are presented for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
External net sales	$	182,090	$	170,248	$	528,751	$	507,090
Inter-business net sales	89		—		215		—
Net sales	182,179		170,248		528,966		507,090
Cost of revenues	40,791		38,421		116,069		116,208
Gross profit	141,388		131,827		412,897		390,882
Operating expenses	79,581		66,070		257,211		207,412
Operating income	$	61,807	$	65,757	$	155,686	$	183,470

Cloud Services’ net sales of $182.2 million for the three months ended September 30, 2021 increased $11.9 million, or 7.0%, from the prior comparable period primarily due to business acquisitions acquired, partially offset by businesses sold subsequent to the third quarter 2020. Cloud Services’ net sales of $529.0 million for the nine months ended September 30, 2021

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increased $21.9 million, or 4.3%, from the prior comparable period primarily due to business acquisitions acquired, partially offset by businesses sold subsequent to the third quarter 2020.

Cloud Services’ gross profit of $141.4 million for the three months ended September 30, 2021 increased $9.6 million, or 7.3%, from the prior comparable period primarily due to business acquisitions; partially offset by businesses sold subsequent to the third quarter 2020. Cloud Services’ gross profit of $412.9 million for the nine months ended September 30, 2021 increased $22.0 million, or 5.6%, from the prior comparable period primarily due to business acquisitions; partially offset by businesses sold subsequent to the third quarter 2020.

Cloud Services’ operating expenses of $79.6 million for the three months ended September 30, 2021 increased $13.5 million from the prior comparable period primarily due to expense associated with businesses acquired in and subsequent to the third quarter 2020 and increased marketing and advertising costs; partially offset by businesses sold subsequent to the prior comparable period. Cloud Services’ operating expenses of $257.2 million for the nine months ended September 30, 2021 increased $49.8 million from the prior comparable period primarily due to expense associated with businesses acquired in and subsequent to the third quarter 2020, increased marketing and advertising costs and the recognition of a goodwill impairment on business; partially offset by businesses sold subsequent to the prior comparable period.

As a result of these factors, Cloud Services’ operating income of $61.8 million for the three months ended September 30, 2021 decreased $(4.0) million, or (6.0)%, from the prior comparable period. Cloud Services’ operating income of $155.7 million for the nine months ended September 30, 2021 decreased $(27.8) million, or (15.1)%, from the prior comparable period.

Liquidity and Capital Resources

Cash and Cash Equivalents and Investments

At September 30, 2021, we had cash, cash equivalents and investments of $657.2 million compared to $340.8 million at December 31, 2020. The increase in cash and investments resulted primarily from cash provided from operations and proceeds from the Bridge Loan Facility (defined below); partially offset by the repayment of debt and cash used in business acquisitions, purchases of property and equipment (including capitalized labor), repurchase of common stock and investments. At September 30, 2021, cash and investments consisted of cash and cash equivalents of $546.5 million, short-term investments of zero and long-term investments of $110.7 million. Our investments consist of equity and debt securities. For financial statement presentation, we classify our debt securities primarily as short- and long-term based upon their maturity dates. Short-term investments mature within one year of the date of the financial statements and long-term investments mature one year or more from the date of the financial statements. As of September 30, 2021, cash and investments held within domestic and foreign jurisdictions were $491.0 million and $166.2 million, respectively.

On April 7, 2021, the Company entered into a Credit Agreement (the “Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as administrative agent, collateral agent and sole lead arranger for the Lenders (the “Agent”). Pursuant to the Credit Agreement, the Lenders have provided the Company with a revolving credit facility of $100 million (the “Credit Facility”). Subject to customary conditions, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250 million, for a total aggregate commitment of up to $350 million. The proceeds of the Credit Facility are intended to be used for working capital and general corporate purposes of the Company and its subsidiaries, including to finance certain permitted acquisitions and capital expenditures in accordance with the terms of the Credit Agreement. The final maturity of the Credit Facility will occur on April 7, 2026.

On June 2, 2021, June 21, 2021, August 20, 2021 and September 16, 2021, we entered into First, Second, Third and Fourth Amendments (together the “Amendments”) to Credit Agreement. The Amendments (i) provided for the issuance of a senior secured term loan under the Credit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of our cloud fax business into a new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement.

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On October 7, 2021, in exchange for the equity interest in Consensus, Consensus paid Ziff Davis approximately $269.6 million of cash and issued $500.0 million of senior notes due 2028 to Ziff Davis and Ziff Davis exchanged such notes with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A. and MUFG Union Bank, N.A., as administrative agent for the lenders, in exchange for extinguishment of a similar amount indebtedness under the Bridge Loan Facility. Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A.

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

In the first nine months of 2021, the Company received capital call notices from the management of OCV Management, LLC for $21.2 million, inclusive of certain management fees. Of the outstanding balance, $21.2 million has been paid for the nine months ended September 30, 2021.

We currently anticipate that our existing cash and cash equivalents and cash generated from operations will be sufficient to meet our anticipated needs for working capital, capital expenditures and stock repurchases, if any, for at least the next 12 months.

Cash Flows

Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalents. Net cash provided by operating activities was $430.3 million and $356.0 million for the nine months ended September 30, 2021 and 2020, respectively. Our operating cash flows resulted primarily from cash received from our customers offset by cash payments we made to third parties for their services, employee compensation and interest payments associated with our debt. The increase in our net cash provided by operating activities in 2021 compared to 2020 was attributable to additional income after considering noncash items, less cash outflow associated with accounts payable and accrued expenses and increased cash inflow associated with deferred revenue; partially offset by higher income tax payments, cash outflow associated with long-term liabilities and higher accounts receivable and prepaid expenses. Our cash and cash equivalents were $546.5 million and $242.7 million at September 30, 2021 and December 31, 2020, respectively.

Net cash used in investing activities was $159.6 million and $107.3 million for the nine months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021 and 2020, net cash used in investing activities was primarily due to business acquisitions and capital expenditures associated with the purchase of property and equipment (including capitalized labor) and the purchase of investments; partially offset by proceeds from the sale of businesses and distributions from an equity method investment. The increase in our net cash used in investing activities in 2021 compared to 2020 was primarily due to additional cash used for business acquisitions.

Net cash provided by (used in) financing activities was $39.8 million and $(256.9) million for the nine months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021, net cash provided by financing activities was primarily due to the proceeds from the Bridge Loan Facility, issuance of common stock under the employee stock purchase plan and the exercise of options, partially offset by the repayment of debt, repurchase of common stock and business acquisitions. The change in net cash provided by financing activities in 2021 compared to 2020 was primarily attributable to proceeds from a bridge loan in 2021.

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Stock Repurchase Program

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

In November 2018 and May 2019, the Company entered into Rule 10b5-1 trading plans with a broker to facilitate the repurchase program. 600,000 shares were repurchased under the share repurchase program in 2018 at an aggregate cost of $42.5 million and were subsequently retired in March 2019.

During the year ended December 31, 2019, the Company repurchased 197,870 shares at an aggregate cost of $16.0 million which were subsequently retired in the same year.

During the year ended December 31, 2020, the Company repurchased 1,140,819 shares under this program at an aggregate cost of $87.5 million, which were subsequently retired in the same year. As of December 31, 2020, all the available shares were repurchased under the 2012 Program at an aggregate cost of $204.6 million (including an immaterial amount of commission fees).

On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to 10 million shares of our common stock through August 6, 2025 (the “2020 Program”) in addition to the five million shares repurchased under the 2012 Program. During the three month period ended September 30, 2021, we repurchased no shares under this program. Cumulatively at September 30, 2021, 2,490,599 shares were repurchased at an aggregate cost of $177.8 million (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of September 30, 2021

	Payments Due in (in thousands)
Contractual Obligations	2021		2022		2023		2024		2025		Thereafter		Total
Long-term debt - principal (a)	$	—	$	—	$	—	$	—	$	—	$	1,300,000	$	1,300,000
Long-term debt - interest (b)	24,559		44,313		44,313		44,313		44,313		183,061		384,872
Bridge loan (c)	485,000		—		—		—		—		—		485,000
Operating leases (d)	8,507		31,926		26,494		18,839		10,497		35,250		131,513
Telecom services and co-location facilities (f)	2,539		1,712		456		42		—		—		4,749
Holdback payments (g)	3,693		16,944		950		—		—		—		21,587
Transition tax (h)	—		—		—		3,189		8,486		—		11,675
Self-Insurance (i)	8,861		13,532		3,001		—		—		—		25,394
Other (j)	381		598		—		—		—		—		979
Total	$	533,540	$	109,025	$	75,214	$	66,383	$	63,296	$	1,518,311	$	2,365,769

(a)These amounts represent principal on long-term debt.

(b)These amounts represent interest on long-term debt.

(c)These amounts represent principal on short-term debt.

(d)These amounts represent undiscounted future minimum rental commitments under noncancellable operating leases.

(e)These amounts represent undiscounted future minimum rental commitments under noncancellable finance leases.

(f)These amounts represent service commitments to various telecommunication providers.

(g)These amounts represent the holdback amounts in connection with certain business acquisitions.

(h)These amounts represent commitments related to the transition tax on unrepatriated foreign earnings reduced by the 2017 overpayment of US Federal Income Tax.

(i)These amounts represent health and dental insurance plans in connection to self-insurance.

(j)These amounts represent certain consulting and Board of Directors fee arrangements, software license and implementation commitments and others.

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As of September 30, 2021, our liability for uncertain tax positions was $54.2 million. The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with such authorities.

We have not presented contingent consideration associated with acquisitions (other than contingent consideration which we have deemed as certain in terms of amount and timing) in the table above due to the uncertainty of the amounts and the timing of cash settlements. We have also not presented our remaining commitment to OCV Management, LLC of approximately $72.5 million due to the uncertainty of timing of funding requests.

Off-Balance Sheet Arrangements

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

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

The following discussion of the market risks we face contains forward-looking statements. Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those discussed in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. Ziff Davis undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors described in this document and in the other documents incorporated by reference herein, including our Annual Report on Form 10-K for the year ended December 31, 2020 as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2021.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and borrowings under our Credit Facility that bear variable market interest rates. The primary objectives of our investment activities are to preserve our principal while at the same time maximizing yields without significantly increasing risk. To achieve these objectives, we maintain our portfolio of cash equivalents and investments in a mix of instruments that meet high credit quality standards, as specified in our investment policy or otherwise approved by the Board of Directors. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of September 30, 2021, 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, 2021, we had investments in debt securities with effective maturities greater than one year of approximately zero. As of September 30, 2021 and December 31, 2020, we had cash and cash equivalent investments primarily in money market funds with maturities of 90 days or less of $546.5 million and $242.7 million, respectively. 

On April 7, 2021, the Company entered into a Credit Agreement (“Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as administrative agent, collateral agent and sole lead arranger for the Lenders (the “Agent”). Pursuant to the Credit Agreement, the Lenders provided the Company with a revolving credit facility of $100 million (the “Credit Facility”). Subject to customary conditions, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250 million, for a total aggregate commitment of up to $350 million. The proceeds of the Credit Facility are intended to be used for working capital and general corporate purposes of the Company and its subsidiaries, including to finance certain permitted acquisitions and capital expenditures in accordance with the terms of the Credit Agreement.

At the Company’s option, amounts borrowed under the Credit Agreement will bear interest at either (i) a base rate equal to the greatest of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus ½ of 1% per annum, (y) the rate of interest per annum most recently announced by the Agent as its U.S. Dollar “Reference Rate” and (z) one month LIBOR plus 1.00% or (ii) a rate per annum equal to LIBOR divided by 1.00 minus the LIBOR Reserve Requirements (as defined in the Credit Agreement), in each case, plus an applicable margin. The applicable margin relating to any base rate loan will range from 0.50% to 1.25% and the applicable margin relating to any LIBOR loan will range from 1.50% to 2.25%, in each case, depending on the total leverage ratio of the Company. The final maturity of the Credit Facility will occur on April 7, 2026. The Company is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty.

On June 2, 2021, June 21, 2021, August 20, 2021 and September 16, 2021, the Company entered into First, Second, Third and Fourth Amendments (together the “Amendments”) to the Credit Agreement. The Amendments (i) provided for the issuance of a senior secured term loan under the Credit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of the Company’s cloud fax business into a new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement. As of September 30, 2021, the Company had drawn on the full amount of the Bridge Loan Facility with $485.0 million outstanding (later extinguished as described below). The proceeds of the Bridge Loan Facility were used to redeem the Company’s 3.25% Convertible Notes.

The loans under the Bridge Loan Facility (the “Bridge Loans”) bore interest at a rate per annum equal to (i) initially upon funding of the Bridge Loans, either a base rate plus 2.00%, or a LIBOR rate plus 3.00%, (ii) from six months after the funding date of the Bridge Loans until twelve months after the funding date of the Bridge Loans, either a base rate plus 2.50%, or a LIBOR rate plus 3.50%, and (iii) from twelve months after the funding date of the Bridge Loans until repayment of the

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Bridge Loans, either a base rate plus 3.00% or a LIBOR rate plus 4.00%. The Bridge Loan Facility were to mature on the date that is 364 days after the funding date of the Bridge Loans, with two automatic extensions, each for an additional three months, if the spin-off transaction has not been declared effective.

On October 7, 2021, in exchange for the equity interest in Consensus, Consensus paid Ziff Davis approximately $269.6 million of cash and issued $500.0 million of senior notes due 2028 to Ziff Davis and Ziff Davis exchanged such notes with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A. and MUFG Union Bank, N.A., as administrative agent for the lenders, in exchange for extinguishment of a similar amount indebtedness under the Bridge Loan Facility. Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A.

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, Australia and the European Union. Our principal exposure to foreign currency risk relates to investment and inter-company debt in foreign subsidiaries that transact business in functional currencies other than the U.S. Dollar, primarily the Australian Dollar, the Canadian Dollar, the Euro, the Hong Kong Dollar, the Japanese Yen, the New Zealand Dollar, the Norwegian Kroner and the British Pound Sterling. If we are unable to settle our short-term inter-company debts in a timely manner, we remain exposed to foreign currency fluctuations.

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

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

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

Foreign exchange gain (losses) for the three months ended September 30, 2021 and 2020 were $1.9 million and $13.9 million, respectively, and for the nine months ended September 30, 2021 and 2020 were $1.6 million and $15.0 million, respectively. The decrease in gains to our earnings in the three months ended September 30, 2021 were attributable to lower inter-company balances between periods in foreign subsidiaries that were in functional currencies other than the U.S. Dollar and exchange rate fluctuations.

Cumulative translation adjustments, net of tax, included in other comprehensive income for the three months ended September 30, 2021 and 2020 were $11.1 million and $3.2 million, respectively, and for the nine months ended September 30, 2021 and 2020 were $16.3 million and $12.1 million, respectively.

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

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Item 4.Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

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

As of the end of the period covered by this report, the Company’s management, with the participation of Vivek Shah, our principal executive officer, and Steve P. Dunn, our interim principal financial officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, Mr. Shah and Mr. Dunn concluded that these disclosure controls and procedures were effective as of the end of the period covered in this Quarterly Report on Form 10-Q.

(b) Changes in Internal Controls

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) which occurred during the third quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.   OTHER INFORMATION

Item 1.Legal Proceedings

See Note 11 – Commitments and Contingencies of the Notes to Financial Statements (Part I, Item 1) for information regarding certain legal proceedings in which we are involved.

Item 1A. Risk Factors

In addition to the other information set forth in this report, before deciding to invest in the Company or to maintain or increase your investment, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in Part II, Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (the “10-K/10-Q Risk Factors”) as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2021. If any of these risks occur, our business, prospects, financial condition, operating results and cash flows could be materially adversely affected. The 10-K/10-Q Risk Factors are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. There have been no material changes from the 10-K/10-Q Risk Factors.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(a)Unregistered Sales of Equity Securities

 None.

(b)Issuer Purchases of Equity Securities

Effective February 15, 2012, the Company’s Board of Directors approved a program authorizing the repurchase of up to five million shares of our common stock through February 20, 2013 (the “2012 Program”) which was subsequently extended through February 20, 2021.

In November 2018 and May 2019, the Company entered into Rule 10b5-1 trading plans with a broker to facilitate the repurchase program. 600,000 shares were repurchased under the share repurchase program in 2018 at an aggregate cost of $42.5 million and were subsequently retired in March 2019. During the year ended December 31, 2019, the Company repurchased 197,870 shares at an aggregate cost of $16.0 million which were subsequently retired in the same year. During the year ended December 31, 2020, the Company repurchased 1,140,819 shares under this program at an aggregate cost of $87.5 million, which were subsequently retired in the same year. As of December 31, 2020, all the available shares were repurchased under the 2012 Program at an aggregate cost of $204.6 million (including an immaterial amount of commission fees).

On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to 10 million shares of our common stock through August 6, 2025 (the “2020 Program”) in addition to the five million shares repurchased under the 2012 Program. During the nine month period ended September 30, 2021, the Company repurchased no shares under this program. Cumulatively at September 30, 2021, 2,490,599 shares were repurchased at an aggregate cost of $177.8 million (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired. See Note 13, “Stockholders’ Equity” of the Notes to the Condensed Consolidated Financial Statements.

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The following table details the repurchases that were made under and outside the 2020 Program during the three months ended September 30, 2021:

Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Program	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program
July 1, 2021 - July 31, 2021	45,243	$	139.97	—	7,509,401
August 1, 2021 - August 31, 2021	2,140	$	141.13	—	7,509,401
September 1, 2021 - September 30, 2021	2,258	$	136.32	—	7,509,401
Total	49,641			—	7,509,401

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

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not Applicable.

Item 5.Other Information

None.

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Item 6.Exhibits

2.1	Separation and Distribution Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
3.1	Amended and Restated Certificate of Incorporation of J2 Global, Inc., dated as of June 10, 2014 (2)
3.2	Amendment to Amended and Restated Certificate of Incorporation of J2 Global, Inc. dated as of September 5, 2019 (3)
3.3	Certificate of Amendment to Amended and Restated Certificate of Incorporation of Ziff Davis, Inc. dated as of October 7, 2021 (1)
3.4	Fifth Amended and Restated Bylaws of Ziff Davis, Inc.
10.1	Second, Third and Fourth Amendments to Credit Agreement by and among J2 Global, Inc., the subsidiaries of J2 Global, Inc. party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A., as lenders, and MUFG Union Bank, N.A., as administrative agent for the lenders. (4)
10.2	Transition Services Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
10.3	Tax Matters Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
10.4	Employee Matters Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
10.5	Intellectual Property License Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
10.6	Stockholder and Registration Rights Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
31.1	Rule 13a-14(a) Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Rule 13a-14(a) Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Section 1350 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Section 1350 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from Ziff Davis, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 and 2020, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020, (v) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020, and (vi) the Notes to Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File - the cover page from Ziff Davis, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 is formatted in Inline XBRL

(1)    Incorporated by reference to Ziff Davis’ Current Report on Form 8-K filed with the Commission on October 8, 2021.

(2)    Incorporated by reference to Ziff Davis’ Current Report on Form 8-K filed with the Commission on June 10, 2014.

(3)    Incorporated by reference to Ziff Davis’ Current Report on Form 8-K filed with the Commission on November 1, 2019.

(4)    Incorporated by reference to Ziff Davis’ Current Report on Form 8-K filed with the Commission on September 22, 2021.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		Ziff Davis, Inc.
Date:	November 9, 2021	By:	/s/ VIVEK SHAH
			Vivek Shah
			Chief Executive Officer and a Director
			(Principal Executive Officer)

 

Date:	November 9, 2021	By:	/s/ STEVE P. DUNN
			Steve P. Dunn
			Chief Accounting Officer
			(Interim Principal Financial Officer and
			Principal Accounting Officer)

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INDEX TO EXHIBITS

Exhibit Number	Description
2.1	Separation and Distribution Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
3.1	Amended and Restated Certificate of Incorporation of J2 Global, Inc., dated as of June 10, 2014 (2)
3.2	Amendment to Amended and Restated Certificate of Incorporation of J2 Global, Inc. dated as of September 5, 2019 (3)
3.3	Certificate of Amendment to Amended and Restated Certificate of Incorporation of Ziff Davis, Inc. dated as of October 7, 2021 (1)
3.4	Fifth Amended and Restated Bylaws of Ziff Davis, Inc.
10.1	Second, Third and Fourth Amendments to Credit Agreement by and among J2 Global, Inc., the subsidiaries of J2 Global, Inc. party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A., as lenders, and MUFG Union Bank, N.A., as administrative agent for the lenders. (4)
10.2	Transition Services Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
10.3	Tax Matters Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
10.4	Employee Matters Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
10.5	Intellectual Property License Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
10.6	Stockholder and Registration Rights Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (1)
31.1	Rule 13a-14(a) Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Rule 13a-14(a) Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Section 1350 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Section 1350 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from Ziff Davis, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 and 2020, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020, (v) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020, and (vi) the Notes to Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File - the cover page from Ziff Davis, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 is formatted in Inline XBRL

(1)    Incorporated by reference to Ziff Davis’ Current Report on Form 8-K filed with the Commission on October 8, 2021.

(2)    Incorporated by reference to Ziff Davis’ Current Report on Form 8-K filed with the Commission on June 10, 2014.

(3)    Incorporated by reference to Ziff Davis’ Current Report on Form 8-K filed with the Commission on November 1, 2019.

(4)    Incorporated by reference to Ziff Davis’ Current Report on Form 8-K filed with the Commission on September 22, 2021.

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EX-3.4

FIFTH

AMENDED AND RESTATED BY-LAWS

OF

J2 GLOBALZIFF DAVIS, INC.

OCTOBER 7, 2021

ARTICLE I

STOCKHOLDERS

Section 1.1. Annual Meetings. An annual meeting of stockholders shall be held within five months after the close of the fiscal year of the Corporation for the election of directors at such date, time and place either within or without the State of Delaware as may be designated by the Board of Directors from time to time. Any other proper business may be transacted at the annual meeting.

Section 1.2. Special Meetings. Special meetings of stockholders may be called at any time by the Chairman of the Board, if any, the Vice Chairman of the Board, if any, the President or the Board of Directors, to be held at such date, time and place either within or without the State of Delaware as may be stated in the notice of the meeting. A special meeting of stockholders shall be called by the Secretary upon the written request, stating the purpose of the meeting, of stockholders who together own of record a majority of the outstanding shares of each class of stock entitled to vote at such meeting.

Section 1.3. Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation.

Section 1.4. Adjournments. Any meeting of stockholders, annual or special, may be adjourned from time to time, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 1.5. Quorum. At each meeting of stockholders, except where otherwise provided by law or the certificate of incorporation or these by-laws, the holders of a majority of the outstanding shares of stock entitled to vote on a matter at the meeting, present in person or represented by proxy, shall constitute a quorum. For purposes of the foregoing, where a separate vote by class or classes is required for any matter, the holders of a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum to take action with respect to that vote on that matter. Two or more classes or series of stock shall be considered a single class if the holders thereof are entitled to vote together as a single class at the meeting. In the absence of a quorum of the holders of any class of stock entitled to vote on a matter, the holders of such class so present or represented may, by majority vote, adjourn the meeting of such class from time to time in the

manner provided by Section 1.4 of these by-laws until a quorum of such class shall be so present or represented. Shares of its own capital stock belonging on the record date for the meeting to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.

Section 1.6. Organization. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman or any Co-Chairman of the Board, if any, or in the absence of the Vice Chairman or any Co- Chairman of the Board by the President, or in the absence of the President by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairman of the meeting may appoint any person to act as secretary of the meeting.

The order of business at each such meeting shall be as determined by the chairman of the meeting. The chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the Corporation, restrictions on entry to such meeting after the time prescribed for the commencement thereof and the opening and closing of the voting polls.

Section 1.7. Inspectors. Prior to any meeting of stockholders, the Board of Directors or the President shall appoint one or more inspectors to act at such meeting and make a written report thereof and may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at the meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting and the validity of proxies and ballots, count all votes and ballots, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons to assist them in the performance of their duties. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxy or vote, nor any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted therewith, any information provided by a stockholder who submits a proxy by telegram, cablegram or other electronic transmission from which it can be determined that the proxy was authorized by the stockholder, ballots and the regular books and records of the corporation, and they may also consider other reliable information

for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for such purpose, they shall, at the time they make their certification, specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.

Section 1.8. Voting; Proxies. Unless otherwise provided in the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. Voting at meetings of stockholders need not be by written ballot unless the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or represented by proxy at such meeting shall so determine. Unless otherwise provided by law or by the certificate of incorporation or these by-laws (including Section 2.2 hereof), the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Where a separate vote by class or classes is required, the affirmative vote of the holders of a majority of the shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class or classes, except as otherwise provided by law or by the certificate of incorporation or these by-laws.

Section 1.9. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which

record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

Section 1.10. List of Stockholders Entitled to Vote. The Secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.

Section 1.11. Consent of Stockholders in Lieu of Meeting. Unless otherwise provided in the certificate of incorporation or by law, any action required by law to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to (a) its registered office in the State of Delaware by hand or by certified mail or registered mail, return receipt requested, (b) its principal place of business, or (c) an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent

delivered in the manner required by this by-law to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to (a) its registered office in the State of Delaware by hand or by certified or registered mail, return receipt requested, (b) its principal place of business, or (c) an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were delivered to the Corporation as provided in this Section 1.11.

Section 1.12. Advance Notice of Stockholder Proposals. At any annual or special meeting of stockholders, proposals by stockholders and persons nominated for election as directors by stockholders shall be considered only if advance notice thereof has been timely given as provided herein and such proposals or nominations are otherwise proper for consideration under applicable law and the certificate of incorporation and by-laws of the Corporation. Notice of any proposal to be presented by any stockholder or of the name of any person to be nominated by any stockholder for election as a director of the Corporation at any meeting of stockholders shall be delivered to the Secretary of the Corporation at its principal executive office not less than 60 nor more than 90 days prior to the date of the meeting; provided, however, that if the date of the meeting is first publicly announced or disclosed (in a public filing or otherwise) less than 70 days prior to the date of the meeting, such advance notice shall be given not more than ten days after such date is first so announced or disclosed. Public notice shall be deemed to have been given more than 70 days in advance of the annual meeting if the Corporation shall have previously disclosed, in these by- laws or otherwise, that the annual meeting in each year is to be held on a determinable date, unless and until the Board determines to hold the meeting on a different date. Any stockholder who gives notice of any such proposal shall deliver therewith the text of the proposal to be presented and a brief written statement of the reasons why such stockholder favors the proposal and setting forth such stockholder’s name and address, the number and class of all shares of each class of stock of the Corporation beneficially owned by such stockholder and any material interest of such stockholder in the proposal (other than as a stockholder). Any stockholder desiring to nominate any person for election as a director of the Corporation shall deliver with such notice a statement in writing setting forth the name of the person to be nominated, the number and class of all shares of each class of stock of the Corporation beneficially owned by such person, the information regarding such person required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K adopted by the Securities and Exchange Commission (or the corresponding provisions of any regulation subsequently adopted by the Securities and Exchange Commission applicable to the Corporation), such person’s signed consent to serve as a director of the Corporation if elected, such stockholder’s name and address and the number and class of all shares of each class of stock of the Corporation beneficially owned by such stockholder. As used herein, shares “beneficially owned” shall mean all shares as to which such person, together with such person’s affiliates and associates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934), may be deemed to beneficially own pursuant to Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as well as all shares as to which such person, together with such person’s affiliates and associates, has the right to become the beneficial owner pursuant to any agreement or understanding, or upon the exercise of warrants, options or rights to convert or exchange (whether such rights are exercisable

immediately or only after the passage of time or the occurrence of conditions). The person presiding at the meeting, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall determine whether such notice has been duly given and shall direct that proposals and nominees not be considered if such notice has not been given.

ARTICLE II

BOARD OF DIRECTORS

Section 2.1. Powers; Number; Qualifications. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or in the certificate of incorporation. The Board of Directors shall consist of one or more members, the number thereof to be determined from time to time by the Board. Directors need not be stockholders.

Section 2.2.

(a)    Election. Except as may be otherwise required by the certificate of incorporation, each director shall be elected by the vote of the majority of the votes cast (meaning the number of shares voted “for” a nominee must exceed the number of shares voted “against” such nominee) at any meeting for the election of directors at which a quorum is present, provided that the directors shall be elected by a plurality of the votes cast (instead of by votes cast for or against a nominee) at any meeting at which a quorum is present for which (i) the Secretary of the Corporation receives a notice pursuant to these by-laws that a stockholder intends to nominate a director or directors and (ii) such proposed nomination has not been withdrawn by such stockholder on or prior to the tenth day preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders.

(b)    Term of Office; Resignation; Removal; Vacancies. Each director shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any director may resign at any time upon written notice to the Board of Directors or to the President or the Secretary of the Corporation. Such resignation shall take effect at the time or upon the event specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of any class or series of stock, voting separately as a class, are entitled to elect one or more directors by the certificate of incorporation, the provisions of the preceding sentence shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole. Unless otherwise provided in the certificate of incorporation or these by-laws, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class or from any other cause may be filled by a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes

or series thereof then in office, or by the sole remaining director so elected. Any director elected or appointed to fill a vacancy shall hold office until the next annual meeting of the stockholders, and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

Section 2.3. Regular Meetings. Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board may from time to time determine, and if so determined notice thereof need not be given.

Section 2.4. Special Meetings. Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the Chairman of the Board, if any, by the Vice Chairman or any Co-Chairman of the Board, if any, by the President or by any two directors. Reasonable notice thereof shall be given by the person or persons calling the meeting.

Section 2.5. Participation in Meetings by Conference Telephone Permitted. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the Board of Directors, or any committee designated by the Board, may participate in a meeting of the Board or of such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting.

Section 2.6. Quorum; Vote Required for Action. At all meetings of the Board of Directors, one-third of the entire Board shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board unless the certificate of incorporation or these by-laws shall require a vote of a greater number. In case at any meeting of the Board a quorum shall not be present, the members of the Board present may adjourn the meeting from time to time until a quorum shall be present.

Section 2.7. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman or any Co-Chairman of the Board, if any, or in the absence of the Vice Chairman or any Co-Chairman of the Board by the President, or in their absence by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairman of the meeting may appoint any person to act as secretary of the meeting.

Section 2.8. Action by Directors Without a Meeting. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or of such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.

Section 2.9. Compensation of Directors. Unless otherwise restricted by the certificate of incorporation or these by-laws, the Board of Directors shall have the authority to fix the compensation of directors.

ARTICLE III

COMMITTEES

Section 3.1. Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors or in these by-laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by law to be submitted to stockholders for approval, (ii) adopting, amending or repealing these By-Laws or (iii) removing or indemnifying directors.

Section 3.2. Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board may adopt, amend and repeal rules for the conduct of its business. In the absence of a provision by the Board or a provision in the rules of such committee to the contrary, a majority of the entire authorized number of members of such committee shall constitute a quorum for the transaction of business, the vote of a majority of the members present at a meeting at the time of such vote if a quorum is then present shall be the act of such committee, and in other respects each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these by-laws.

ARTICLE IV

OFFICERS

Section 4.1. Officers; Election. As soon as practicable after the annual meeting of stockholders in each year, the Board of Directors shall elect a President and a Secretary, and it may, if it so determines, elect from among its members a Chairman of the Board, or Co-Chairman of the Board, and a Vice Chairman of the Board. The Board may also elect one or more Vice Presidents, one or more Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and such other officers as the Board may deem desirable or appropriate and may give any of them such further designations or alternate titles as it considers desirable. Any number of offices may be held by the same person unless the certificate of incorporation or these by-laws otherwise provide.

Section 4.2. Term of Office; Resignation; Removal; Vacancies. Unless otherwise provided in the resolution of the Board of Directors electing any officer, each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any officer may resign at any time upon written notice to the Board or to the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. The Board may remove any officer with or without cause at any time. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation, but the election of an officer shall not of itself create contractual rights. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Board at any regular or special meeting.

Section 4.3. Powers and Duties. The officers of the Corporation shall have such powers and duties in the management of the Corporation as shall be stated in these by-laws or in a resolution of the Board of Directors which is not inconsistent with these by-laws and, to the extent not so stated, as generally pertain to their respective offices, subject to the control of the Board. The Secretary shall have the duty to record the proceedings of the meetings of the stockholders, the Board of Directors and any committees in a book to be kept for that purpose. The Board may require any officer, agent or employee to give security for the faithful performance of his or her duties.

ARTICLE V

STOCK

Section 5.1. Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman or Vice Chairman or a Co-Chairman of the Board of Directors, if any, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, representing the number of shares of stock in the Corporation owned by such holder. If such certificate is manually signed by one officer or manually countersigned by a transfer agent or by a registrar, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

If the Corporation is authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided by law, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

ARTICLE VI

MISCELLANEOUS

Section 6.1. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors.

Section 6.2. Seal. The Corporation may have a corporate seal which shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors and Committees. Whenever notice is required to be given by law or under any provision of the certificate of incorporation or these by-laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice unless so required by the certificate of incorporation or these by-laws.

Section 6.4. Indemnification of Directors, Officers and Employees. The Corporation shall indemnify to the full extent permitted by law any person made or threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person or such person’s testator or intestate is or was a director, officer or employee of the Corporation or serves or served at the request of the Corporation any other enterprise as a director, officer or employee. Expenses, including attorneys’ fees, incurred by any such person in defending any such action, suit or proceeding shall be paid or reimbursed by the Corporation promptly upon receipt by it of an undertaking of such person to repay such expenses if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation. The rights provided to any person by this by-law shall be enforceable against the Corporation by such person who shall be presumed to have relied upon it in serving or continuing to serve as a director, officer or employee as provided above. No amendment of this by-law shall impair the rights of any person arising at any time with respect to events occurring prior to such amendment. For purposes of this by-law, the term “Corporation” shall include any predecessor of the Corporation and any constituent corporation (including any constituent of a constituent) absorbed by the Corporation in a

consolidation or merger; the term “other enterprise” shall include any corporation, company, partnership, joint venture, trust or employee benefit plan; service “at the request of the Corporation” shall include service as a director, officer or employee of the Corporation which imposes duties on, or involves services by, such director, officer or employee with respect to an employee benefit plan, its participants or beneficiaries; any excise taxes assessed on a person with respect to an employee benefit plan shall be deemed to be indemnifiable expenses; and action by a person with respect to an employee benefit plan which such person reasonably believes to be in the interest of the participants and beneficiaries of such plan shall be deemed to be action not opposed to the best interests of the Corporation.

Section 6.5. Interested Directors; Quorum. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or her or their votes are counted for such purpose, if: (1) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

Section 6.6. Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same.

Section 6.7. Amendment of By-Laws. These by-laws may be amended or repealed, and new by-laws adopted, by the Board of Directors, but the stockholders entitled to vote may adopt additional by-laws and may amend or repeal any by-law whether or not adopted by them.

Section 6.8. Forum Selection. Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim against the Corporation or any director, officer or other employee of the Corporation arising pursuant to any provision of the General Corporation Law of the State of Delaware or the certificate of incorporation or these by-laws (in each case, as they may be amended from time to time), or (d) any action asserting a claim against the Corporation or any director, officer or other

employee of the Corporation governed by the internal affairs doctrine shall, in each case to the fullest extent permitted by law, be the Chancery Court of the State of Delaware (or if the Chancery Court of the State of Delaware does not have subject matter jurisdiction, a the federal district court for the District of Delaware). Notwithstanding the foregoing, unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, or the rules and regulations thereunder. This Section 6.8 shall not apply to any action brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, or the rules and regulations thereunder. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and, to the fullest extent permitted by law, to have consented to the provisions of this Section 6.8.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vivek Shah, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Ziff Davis, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

		/s/ VIVEK SHAH
		Vivek Shah
Dated:	November 9, 2021	Chief Executive Officer and a Director (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steve P. Dunn, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Ziff Davis, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

		/s/ STEVE P. DUNN
		Steve P. Dunn
Dated:	November 9, 2021	Chief Accounting Officer (Interim Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Vivek Shah, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.The accompanying quarterly report on Form 10-Q for the quarter ended September 30, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ziff Davis, Inc.

		/s/ VIVEK SHAH
		Vivek Shah
Dated:	November 9, 2021	Chief Executive Officer and a Director (Principal Executive Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to Ziff Davis, Inc. and will be retained by Ziff Davis, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Steve P. Dunn, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.The accompanying quarterly report on Form 10-Q for the quarter ended September 30, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ziff Davis, Inc.

		/s/ STEVE P. DUNN
		Steve P. Dunn
Dated:	November 9, 2021	Chief Accounting Officer (Interim Principal Financial Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to Ziff Davis, Inc. and will be retained by Ziff Davis, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2021	Nov. 05, 2021
Entity Addresses [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	0-25965
Entity Registrant Name	ZIFF DAVIS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-1053457
Entity Address, Address Line One	114 5th Avenue
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10011
City Area Code	212
Local Phone Number	503-3500
Entity Information, Former Legal or Registered Name	J2 Global, Inc.
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	ZD
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		48,220,791
Entity Central Index Key	0001084048
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false
Former Address
Entity Addresses [Line Items]
Entity Address, Address Line One	700 S. Flower Street
Entity Address, Address Line Two	15th Floor
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90017

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
ASSETS
Cash and cash equivalents	$ 546,467	$ 242,652
Short-term investments	0	663
Accounts receivable, net of allowances of $14,417 and $16,018, respectively	268,349	325,619
Prepaid expenses and other current assets	73,457	53,909
Total current assets	888,273	622,843
Long-term investments	110,718	97,495
Property and equipment, net	183,179	156,577
Operating lease right-of-use assets	88,331	105,845
Goodwill	1,861,332	1,867,430
Other purchased intangibles, net	160,943	176,473
Deferred income taxes, noncurrent	37,761	56,545
Other assets	19,901	17,027
TOTAL ASSETS	3,830,657	3,665,331
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	228,977	230,651
Income taxes payable, current	1,793	31,753
Deferred revenue, current	197,901	190,644
Operating lease liabilities, current	31,636	32,211
Current portion of long-term debt	568,054	396,801
Other current liabilities	36	497
Total current liabilities	1,028,397	882,557
Long-term debt	1,110,699	1,182,220
Deferred revenue, noncurrent	15,189	14,440
Operating lease liabilities, noncurrent	84,519	99,177
Income taxes payable, noncurrent	11,675	11,675
Liability for uncertain tax positions	54,178	57,081
Deferred income taxes, noncurrent	112,482	162,700
Other long-term liabilities	44,259	44,463
TOTAL LIABILITIES	2,461,398	2,454,313
Commitments and contingencies	0	0
Preferred stock, $0.01 par value	0	0
Common stock, $0.01 par value. Authorized 95,000,000; total issued and outstanding 47,825,827 and 44,346,630 shares at September 30, 2021 and December 31, 2020, respectively.	478	443
Additional paid-in capital	508,493	456,274
Retained earnings	931,477	809,107
Accumulated other comprehensive loss	(71,189)	(54,806)
TOTAL STOCKHOLDERS’ EQUITY	1,369,259	1,211,018
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	3,830,657	3,665,331
Trade names
ASSETS
Intangible assets, net (excluding goodwill)	178,322	187,902
Customer relationship
ASSETS
Intangible assets, net (excluding goodwill)	301,897	377,194
Series A Preferred Stock
LIABILITIES AND STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value	0	0
Series B Preferred Stock
LIABILITIES AND STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value	$ 0	$ 0

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Allowance for doubtful accounts	$ 14,417	$ 16,018
Preferred stock, par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	95,000,000	95,000,000
Common stock, shares issued (in shares)	47,825,827	44,346,630
Common stock, shares outstanding (in shares)	47,825,827	44,346,630
Series A Preferred Stock
Preferred stock, par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	6,000	6,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Series B Preferred Stock
Preferred stock, par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	20,000	20,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Total revenues	$ 444,252	$ 356,976	$ 1,271,480	$ 1,020,353
Cost of revenues	64,302	55,822	185,462	171,755
Gross profit	379,950	301,154	1,086,018	848,598
Operating expenses:
Sales and marketing	139,693	95,074	394,981	287,317
Research, development and engineering	21,639	14,261	62,634	43,273
General and administrative	122,477	114,381	359,498	312,283
Goodwill impairment on business	0	0	32,629	0
Total operating expenses	283,809	223,716	849,742	642,873
Income from operations	96,141	77,438	236,276	205,725
Interest expense, net	(19,862)	(22,712)	(62,832)	(65,879)
(Loss) gain on sale of businesses	(24,600)	17,122	(21,798)	17,122
Loss on investments, net	0	(156)	(16,677)	(20,991)
Other income, net	1,660	14,230	1,367	16,413
Income before income taxes and (loss) income from equity method investment, net	53,339	85,922	136,336	152,390
Income tax expense	8,847	24,330	16,723	49,011
(Loss) income from equity method investment, net	(1,923)	(709)	16,596	(10,799)
Net income	$ 42,569	$ 60,883	$ 136,209	$ 92,580
Net income per common share:
Basic (in usd per share)	$ 0.91	$ 1.31	$ 3.01	$ 1.96
Diluted (in usd per share)	$ 0.88	$ 1.31	$ 2.86	$ 1.93
Weighted average shares outstanding:
Basic (in shares)	46,738,073	46,279,515	45,258,819	46,914,750
Diluted (in shares)	48,582,585	46,309,072	47,565,062	47,620,308
Share-based compensation expense	$ 6,755	$ 5,800	$ 19,119	$ 18,643
Cost of revenues
Weighted average shares outstanding:
Share-based compensation expense	108	136	357	413
Sales and marketing
Weighted average shares outstanding:
Share-based compensation expense	427	321	1,160	1,135
Research, development and engineering
Weighted average shares outstanding:
Share-based compensation expense	613	425	1,690	1,340
General and administrative
Weighted average shares outstanding:
Share-based compensation expense	$ 5,607	$ 4,918	$ 15,912	$ 15,755

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 42,569	$ 60,883	$ 136,209	$ 92,580
Other comprehensive loss, net of tax:
Foreign currency translation adjustment	(11,101)	(3,202)	(16,269)	(12,085)
Change in fair value on available-for-sale investments, net of tax expense of $37 for the three and nine months ended September 30, 2021, respectively, and $141 and $314 for the three and nine months ended September 30, 2020, respectively.	(114)	8	(114)	553
Other comprehensive loss, net of tax	(11,215)	(3,194)	(16,383)	(11,532)
Comprehensive income	$ 31,354	$ 57,689	$ 119,826	$ 81,048

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Other comprehensive income, tax expense	$ 37	$ 141	$ 37	$ 314

XML

Condensed Consolidated Statement of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities:
Net income (loss)	$ 136,209	$ 92,580
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	196,443	163,680
Amortization of financing costs and discounts	21,295	21,393
Non-cash operating lease costs	8,366	15,686
Share-based compensation	19,119	18,643
Provision for doubtful accounts	7,934	9,508
Deferred income taxes, net	2,537	7,815
Loss (gain) on sale of businesses	21,798	(17,122)
Lease asset impairments	9,410	9,786
Goodwill impairment on business	32,629	0
Changes in fair value of contingent consideration	(567)	(243)
Foreign currency remeasurement gain	181	(15,919)
(Income) loss from equity method investments	(16,596)	10,799
Loss on equity and debt investments	16,677	20,826
Decrease (increase) in:
Accounts receivable	49,888	57,560
Prepaid expenses and other current assets	(10,610)	(3,279)
Other assets	(2,378)	543
Increase (decrease) in:
Accounts payable and accrued expenses	(1,409)	(26,430)
Income taxes payable	(37,863)	(496)
Deferred revenue	4,774	(10,494)
Operating lease liabilities	(19,346)	(12,857)
Liability for uncertain tax positions	(2,903)	7,746
Other long-term liabilities	(5,336)	6,284
Net cash provided by operating activities	430,252	356,009
Cash flows from investing activities:
Proceeds on sale of available-for-sale investments	663	0
Distribution from equity method investment	15,327	0
Purchases of equity method investment	(22,249)	(29,979)
Purchases of equity investments	(999)	(843)
Purchases of property and equipment	(87,495)	(71,266)
Proceeds from sale of assets	0	507
Acquisition of businesses, net of cash received	(112,444)	(27,156)
Proceeds from sale of businesses, net of cash divested	48,876	24,353
Purchases of intangible assets	(1,255)	(2,902)
Net cash used in investing activities	(159,576)	(107,286)
Cash flows from financing activities:
Payment of debt	(402,414)	0
Payment of note payable	0	(400)
Proceeds from bridge loan	485,000	0
Repurchase of common stock	(29,855)	(238,905)
Issuance of common stock under employee stock purchase plan	4,232	3,303
Exercise of stock options	2,880	952
Deferred payments for acquisitions	(13,387)	(20,427)
Other	(6,619)	(1,377)
Net cash provided by (used in) financing activities	39,837	(256,854)
Effect of exchange rate changes on cash and cash equivalents	(6,698)	446
Net change in cash and cash equivalents	303,815	(7,685)
Cash and cash equivalents at beginning of period	242,652	575,615
Cash and cash equivalents at end of period	$ 546,467	$ 567,930

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss
Beginning balance (in shares) at Dec. 31, 2019		47,654,929
Beginning balance at Dec. 31, 2019	$ 1,311,192	$ 476	$ 465,652	$ 891,526	$ (46,462)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	92,580			92,580
Other comprehensive income, net of tax expense	(11,532)				(11,532)
Vested restricted stock (in shares)		267,894
Vested restricted stock	0	$ 3	(3)
Repurchase and retirement of common stock (in shares)		(3,250,706)
Repurchase and retirement of common stock	(238,905)	$ (31)	(37,541)	(201,333)
Share based compensation	18,643		18,643
Other, net	116		116
Exercise of stock options (in shares)		41,530
Exercise of stock options	952		1,583	(631)
Issuance of shares under employee stock purchase plan (in shares)		53,694
Issuance of shares under employee stock purchase plan	3,303		3,303
Redemption of 3.25% Convertible Note including tax impact	(12)		(12)
Ending balance (in shares) at Sep. 30, 2020		44,767,341
Ending balance at Sep. 30, 2020	1,176,337	$ 448	451,741	782,142	(57,994)
Beginning balance (in shares) at Jun. 30, 2020		46,892,691
Beginning balance at Jun. 30, 2020	1,263,168	$ 469	467,267	850,232	(54,800)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	60,883			60,883
Other comprehensive income, net of tax expense	(3,194)				(3,194)
Vested restricted stock (in shares)		19,893
Repurchase and retirement of common stock (in shares)		(2,145,243)
Repurchase and retirement of common stock	(150,436)	$ (21)	(21,442)	(128,973)
Share based compensation	5,800		5,800
Other, net	116		116
Ending balance (in shares) at Sep. 30, 2020		44,767,341
Ending balance at Sep. 30, 2020	1,176,337	$ 448	451,741	782,142	(57,994)
Beginning balance (in shares) at Dec. 31, 2020		44,346,630
Beginning balance at Dec. 31, 2020	1,211,018	$ 443	456,274	809,107	(54,806)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	136,209			136,209
Other comprehensive income, net of tax expense	(16,383)				(16,383)
Vested restricted stock (in shares)		546,684
Vested restricted stock	0	$ 5	(5)
Repurchase and retirement of common stock (in shares)		(245,083)
Repurchase and retirement of common stock	(29,855)	$ (3)	(15,825)	(14,027)
Share based compensation	19,119		19,119
Other, net	$ (2,183)		(2,371)	188
Exercise of stock options (in shares)	68,601	68,601
Exercise of stock options	$ 2,880	$ 1	2,879
Issuance of shares under employee stock purchase plan (in shares)		58,145
Issuance of shares under employee stock purchase plan	4,232	$ 1	4,231
Redemption of 3.25% Convertible Note including tax impact		3,050,850
Redemption of 3.25% Convertible Note including tax impact	44,222	$ 31	44,191
Ending balance (in shares) at Sep. 30, 2021		47,825,827
Ending balance at Sep. 30, 2021	1,369,259	$ 478	508,493	931,477	(71,189)
Beginning balance (in shares) at Jun. 30, 2021		44,708,235
Beginning balance at Jun. 30, 2021	1,294,500	$ 447	461,422	892,605	(59,974)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	42,569			42,569
Other comprehensive income, net of tax expense	(11,215)				(11,215)
Vested restricted stock (in shares)		112,166
Vested restricted stock	0	$ 1	(1)
Repurchase and retirement of common stock (in shares)		(49,641)
Repurchase and retirement of common stock	(6,921)	$ (1)	(3,035)	(3,885)
Share based compensation	6,755		6,755
Other, net	(2,201)		(2,389)	188
Exercise of stock options (in shares)		23,250
Exercise of stock options	1,549		1,549
Redemption of 3.25% Convertible Note including tax impact		3,031,817
Redemption of 3.25% Convertible Note including tax impact	44,223	$ 31	44,192
Ending balance (in shares) at Sep. 30, 2021		47,825,827
Ending balance at Sep. 30, 2021	$ 1,369,259	$ 478	$ 508,493	$ 931,477	$ (71,189)

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Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Jun. 10, 2014
Other comprehensive income, tax expense	$ 37	$ 141	$ 37	$ 314
3.25% Convertible Notes | Convertible Debt
Stated interest rate					3.25%

XML

Basis of Presentation

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Description of Business

As of September 30, 2021, J2 Global, Inc., together with its subsidiaries (“J2 Global”, the “Company”, “our”, “us”, or “we”), was a leading provider of internet information and services. The Digital Media business specialized in the technology, shopping, gaming, and healthcare markets offering content, tools and services to consumers and businesses. The Cloud Services business provided cloud-based subscription services to consumers and businesses including cloud fax, cybersecurity, privacy and marketing technology.

On October 7, 2021, in connection with the spin-off of its cloud fax business described further below, the Company changed its name from J2 Global, Inc. to Ziff Davis, Inc. (“Ziff Davis”). Additionally, starting October 8, 2021, the Company’s common stock began trading under the stock symbol “ZD.”

The accompanying interim Condensed Consolidated Financial Statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying interim Condensed Consolidated Financial Statements are unaudited and have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements although the Company believes that the disclosures made are adequate to make that information not misleading. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these interim financial statements. It is suggested that these financial statements be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2020, included in our Annual Report (Form 10-K) filed with the SEC on March 1, 2021. Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed therein.

The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period.

Consensus, Inc. Spin-Off

On September 21, 2021, the Company announced that its Board of Directors approved its previously announced separation of the cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“Consensus”). On October 7, 2021 (the “Distribution Date”), the Separation was completed and the Company transferred J2 Cloud Services, LLC to Consensus, Inc. who in turn transferred non-fax assets and liabilities back to Ziff Davis such that Consensus was left with the cloud fax business. The Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution. The Company’s stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock. On October 8, 2021, Consensus began trading on Nasdaq under the stock symbol “CCSI”. Ziff Davis, Inc. (formerly J2 Global, Inc.) retained a 19.9% interest in Consensus following the Separation.

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about investment classifications and the reported amounts of net revenue and expenses during the reporting period. The Company believes that its most significant estimates are those related to revenue recognition, valuation and impairment of investments, its assessment of ownership interests as variable interest entities and the related determination of consolidation, share-based compensation expense, fair value of assets acquired and liabilities assumed in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingencies

and allowances for doubtful accounts. On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances. Actual results could materially differ from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to the novel coronavirus pandemic (“COVID-19”).

Allowances for Doubtful Accounts

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

Revenue Recognition

The Company recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (see Note 3 - Revenues).

Principal vs. Agent

The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance under Topic 606 for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer and (ii) whether the Company controls the specified goods or services prior to transferring control to the customer.

Sales Taxes

The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer.

Investments

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

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

The Company accounts for its investments in equity securities in accordance with ASC Topic No. 321, Investments - Equity Securities (“ASC 321”) which requires the accounting for equity investments (other than those accounted for using the equity method of accounting) generally be measured at fair value for equity securities with readily determinable fair values. For equity securities without a readily determinable fair value that are not accounted for by the equity method, the Company measures the equity security using cost, less impairment, if any, and plus or minus observable price changes arising from

orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported in current earnings (see Note 5 - Investments).

The Company assesses whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions (see Note 5 - Investments).

Variable Interest Entities (“VIE”)

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

a) the Company has the power to direct the activities of the VIE that most significantly impacts the VIEs economic performance (the power criterion); and

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

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

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

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

Impairment or Disposal of Long-Lived Assets

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

The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of long-lived assets may not be recoverable. During the three and nine months ended September 30, 2021, the Company recorded an impairment of certain operating right-of-use assets (see Note 10 - Leases). In the third quarter of 2020, the Company recorded impairment of certain operating right-of-use assets and associated property and equipment. (see Note 10 - Leases).

The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being

actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale.

Business Combinations and Valuation of Goodwill and Intangible Assets

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

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from 1 to 20 years and are included in general and administrative expenses on the Condensed Consolidated Statements of Operations. The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic No. 350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested annually for impairment or more frequently if the Company believes indicators of impairment exist. In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then it performs the impairment test upon goodwill. The impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using the income approach methodology of valuation. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference. In the second quarter of 2021, the Company recorded an impairment to goodwill associated with the plan to sell the Company’s B2B Backup business. This sale closed during the third quarter of 2021 (see Note 6 – Dispositions). No impairment was recorded in the third quarter of 2020. In the first quarter of 2021, the Company changed the annual goodwill impairment assessment date for the Cloud Services business from September 30 to October 1, as it determined this date is preferable, and concluded this was not a material change in accounting principal.

Contingent Consideration

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

The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the Condensed Consolidated Balance Sheets. The Company considers several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former shareholders of acquired companies that remain as key employees receive

compensation other than contingent earn-out payments at a reasonable level compared with the compensation of the Company’s other key employees. The contingent earn-out payments are not affected by employment termination.

The Company measures the contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 7 - Fair Value Measurements). The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses a probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and the amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in its Condensed Consolidated Statements of Cash Flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

The Company reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior quarterly amounts. Changes in the estimated fair value of its contingent earn-out liabilities are reported in general and administrative expenses on the Condensed Consolidated Statements of Operations.

Income Taxes

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

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

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

In addition, on March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was enacted into law and provides for changes to various tax laws that impact businesses. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased

limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act also appropriated funds for the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19. The Company did not seek to borrow any funds under the program. However, as a result of an acquisition that closed during the quarter ended December 31, 2020, the Company assumed outstanding PPP loans that had started the process of being forgiven prior to the closing of the acquisition. During the second quarter of 2021, the Company received approval from the SBA to forgive the entire amount of the outstanding PPP Loan. The amount forgiven did not have a significant impact to the Company’s financial statements.

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

Share-Based Compensation

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

Reclassifications

Certain prior year reported amounts have been reclassified to conform to the 2021 presentation.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2021

Accounting Standards Update and Change in Accounting Principle [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company adopted this ASU in the first quarter of 2021 and has identified no material effect on its financial statements or disclosures.

In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investment - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The amendments in this ASU clarify certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method of accounting in Topic 323, and the accounting for certain forward contracts and purchased options under Topic 815. This ASU identifies two main areas for improvement: (1) accounting for certain equity securities upon the application or discontinuation of the equity method of accounting and (2) scope considerations for forward contracts and purchased options on certain securities. The amendment states, as it is related to the first area of improvement, that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendment also states, as it is relates to forward contracts and purchased options on certain securities, an entity should consider certain criteria to determine the accounting for those forward contracts and purchased options. The Company adopted this ASU in the first quarter of 2021 and has identified no effect on its financial statements or disclosures.

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

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

In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements. The amendments in this ASU improve the consistency of the codification and reorganize the guidance into appropriate sections providing less opportunities for disclosures to be missed. The amendments in this update do not change GAAP and are not expected to result in a significant change in practice. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020. The Company adopted this ASU in the first quarter of 2021 and has identified no effect on its financial statements or disclosures.

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Revenues

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

Digital Media

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

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

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

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

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

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

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

Cloud Services

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

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

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

	Three Months Ended September 30,				Nine Months Ended September 30,
Digital Media	2021		2020		2021		2020
Advertising (a)	$	198,794	$	138,441	$	574,465	$	380,188
Subscription and licensing (a)	52,010		44,423		145,935		121,028
Other (a)	11,625		3,920		22,880		12,246
Total Digital Media revenues	$	262,429	$	186,784	$	743,280	$	513,462
Cloud Services
Subscription and licensing	$	182,087	$	170,233	$	528,699	$	507,021
Other	92		15		267		69
Total Cloud Services revenues	$	182,179	$	170,248	$	528,966	$	507,090
Corporate	$	—	$	—	$	—	$	1
Elimination of inter-segment revenues	(356)		(56)		(766)		(200)
Total Revenues	$	444,252	$	356,976	$	1,271,480	$	1,020,353
Timing of revenue recognition
Point in time	$	13,606	$	8,396	$	30,669	$	19,366
Over time	430,646		348,580		1,240,811		1,000,987
Total	$	444,252	$	356,976	$	1,271,480	$	1,020,353

(a) The Company reclassified approximately $3.2 million and $8.8 million of revenue during the three and nine months ended September 30, 2020, respectively, from ‘Subscription and licensing’ to ‘Advertising’ and reclassified approximately $1.7 million and $6.7 million during the three and nine months ended September 30, 2020, respectively, from “Subscription and licensing’ to ‘Other’ to conform with current period presentation. These reclassifications were made in order to separate games publishing revenue from traditional advertising revenue.

The Company has recorded $31.8 million and $29.0 million of revenue for the three months ended September 30, 2021 and 2020, respectively, and $161.2 million and $142.5 million of revenue for the nine months ended September 30, 2021 and 2020, respectively, which was previously included in the deferred revenue balance as of the beginning of each respective year.

As of September 30, 2021, the Company acquired $7.2 million in deferred revenue in connection with the Company’s business acquisitions (see Note 4 - Business Acquisitions) which are subject to purchase accounting adjustments.

Performance Obligations

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, revenues are allocated to each performance obligation based on its relative standalone selling price.

The Company satisfies its performance obligations within the Digital Media business upon delivery of services to its customers. In addition, the Company provides content to its advertising partners which the Company sells to its partners’ customer base and receives a revenue share based on the terms of the agreement.

The Company satisfies its performance obligations within the Cloud Services business upon delivery of services to its customers. Payment terms vary by type and location of our customers and the services offered. The term between invoicing and when payment is due is not significant. Due to the nature of the services provided, there are no obligations for returns.

Significant Judgments

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

Performance Obligations Satisfied Over Time

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

Advertising

•Website reporting by the Company, the customer, or a third-party contains the delivery evidence needed to satisfy the performance obligations within the advertising contract

•Successfully delivered leads are evidenced by either delivery reports from the Company’s internal lead management systems or through e-mail communication and/or other evidence of delivery showing acceptance of leads by the customer

•Commission is evidenced by direct site reporting from the affiliate or via direct confirmation from the customer

Subscription and Licensing

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

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

The Company’s Cloud Services business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based and include fax, voice, backup, security, CPP, and email marketing products where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following materially distinct performance obligations are satisfied: 

•Faxing capabilities are provided

•Voice services are provided

•Email marketing services are provided

•Consumer privacy services are provided

•Security solutions, including email and endpoint are provided

•Online data backup capabilities are provided

The Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period and believes that the method used is a faithful depiction of the transfer of goods and services.

Performance Obligations Satisfied at a Point in Time

    The Company’s Digital Media business has technology subscriptions that have standalone functionality. As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time. This is evidenced once a digital key is delivered to the customer. Once the key is delivered to the customer, the customer has full control of the technology and the Company has no further performance obligations. The Company has concluded that revenue is recognized once the digital key is delivered. The Company believes that this method is a faithful depiction of the transfer of goods and services.

Practical Expedients

Existence of a Significant Financing Component in a Contract

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

Costs to Fulfill a Contract

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

In addition, the Company partners with various affiliates in order to generate a portion of its revenue for certain lines of business. The commissions earned by the Company’s affiliates are incentive based and are paid on the acquisition of new customers in a given period. For those customers with amortization periods determined to be greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

Revenues Invoiced

The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.

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Business Acquisitions

9 Months Ended

Sep. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Business Acquisitions

Business Acquisitions

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

The Company completed the following acquisitions during the first nine months of fiscal 2021, paying the purchase price in cash in each transaction: (a) an asset purchase of DailyOM, acquired on April 30, 2021, a California-based-based provider of health and wellness digital media, content and learning business; (b) a share purchase of SEOmoz, acquired on June 4, 2021, a Seattle-based provider of search engine optimization (“SEO”) solutions; (c) an asset purchase of Solutelia, LLC, acquired on July 15, 2021, a Colorado-based on-demand wireless telecommunications network monitoring and analysis, testing and optimization software business and related wireless telecommunications engineering services business; (d) a stock purchase of Arthur L. Davis Publishing, acquired on September 23, 2021, an Iowa-based digital nursing publication; and (e) three immaterial Digital Media acquisitions.

The Condensed Consolidated Statement of Operations since the date of each acquisition and balance sheet as of September 30, 2021, reflect the results of operations of all 2021 acquisitions. For the nine months ended September 30, 2021, these acquisitions contributed $21.3 million to the Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to the Company’s integration activities and is impracticable to provide. Total consideration for these transactions was $135.1 million net of cash acquired and assumed liabilities and is subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

Assets and Liabilities	Valuation
Accounts receivable	$	5,167
Prepaid expenses and other current assets		1,639
Property and equipment		1,838
Operating lease right-of-use assets, noncurrent		5,888
Trade names		11,843
Customer relationship		11,521
Goodwill		85,552
Other intangibles		35,285
Deferred tax asset		230
Accounts payable and accrued expenses		(2,800)
Deferred revenue		(7,192)
Operating lease liabilities, current		(7,191)
Other current liabilities		(14)
Deferred tax liability		(4,936)
Other long-term liabilities		(1,726)
Total	$	135,104

During the nine months ended September 30, 2021, the purchase price accounting has been finalized for EDC Systems Inc (operating under the name “SRFax”), Inspired eLearning and other immaterial Digital Media and Cloud Services businesses. The initial accounting for the 2021 acquisitions are incomplete and subject to change. The Company has recorded provisional amounts which may be based upon past acquisitions with similar attributes for certain intangible assets (including trade names, software and customer relationships), preliminary acquisition date working capital and related tax items.

During the nine months ended September 30, 2021, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Digital Media business, which resulted in a net decrease in goodwill of $1.5 million. In addition, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Voice, Backup, Security and CPP businesses which resulted in a net increase in goodwill of $0.5 million. (see Note 8 - Goodwill and Intangible Assets). Such adjustments had an immaterial impact on the amortization expense within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with these acquisitions during the nine months ended September 30, 2021 is $85.6 million, of which $44.1 million is expected to be deductible for income tax purposes.

Pro Forma Financial Information for All 2021 Acquisitions

The following unaudited pro forma supplemental information is based on estimates and assumptions that the Company believes to be reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of income in future periods or the results that actually would have been realized had the Company and the acquired businesses been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2020. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.

The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its 2021 acquisitions as if each acquisition had occurred on January 1, 2020 (in thousands, except per share amounts):

	Nine Months Ended September 30,
	2021		2020
	(unaudited)		(unaudited)
Revenues	$	1,313,417	$	1,084,967
Net income	$	143,420	$	95,036
EPS - Basic	$	3.17	$	2.02
EPS - Diluted	$	3.01	$	1.99

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Investments

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

Investments consist of equity and debt securities. 

The Company determined the equity securities that were received as part of the consideration for the sale of Tea Leaves Health, LLC (“Tea Leaves”) in fiscal year 2017 are without a readily determinable fair value because these securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. As a result, management has elected to alternatively measure this investment at cost, less impairment, adjusted for subsequent observable price changes to estimate fair value. The Company will make a “reasonable effort” to identify any observable price changes for identical or similar investments with the issuer that are known are can be reasonably known. Any changes in the carrying value of the equity securities will be reported in current earnings as (gain) loss on investments, net. In addition, the Company determined that the shares of redeemable preferred stock that were also received as part of the consideration for the sale of Tea Leaves are corporate debt securities and are classified as available-for-sale securities. These debt securities were subsequently exchanged in a non-cash transaction in the first quarter of 2020.

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

The following table summarizes the gross unrealized gains and losses and estimated fair values for the Company’s securities without a readily determinable fair value (in thousands):

	Cost		Impairment		Adjustments		Reported Amount
September 30, 2021
Equity securities	$	31,777	$	(16,677)	$	(479)	$	14,621
Total	$	31,777	$	(16,677)	$	(479)	$	14,621
December 31, 2020
Equity securities	$	50,384	$	(19,605)	$	(479)	$	30,300
Total	$	50,384	$	(19,605)	$	(479)	$	30,300

During the second quarter of 2021, the Company recorded a $16.7 million impairment loss on investments related to a decline in value due to a pending sales transaction of an investee. The Company is not expected to recover the recorded cost of these securities and has reduced such amount to what the Company expects to receive as a result of the sale.

During the first nine months of 2020, the Company recorded a loss on investments of $21.0 million, which consists primarily of the following:

1.an impairment loss of $19.6 million due to changes in the investee’s capital structure and overall market volatility;

2.a loss on exchange of redeemable preferred stock, in the amount of $4.4 million, that that was previously classified as available-for-sale corporate debt securities for a new series of preferred stock classified as equity securities; partially offset by

3.a recognized gain of $3.2 million due to the Company’s purchase of preferred stock for $0.8 million.

Impairment losses, including gains and losses, are recorded in loss on investments, net on the Condensed Consolidated Statements of Operations.

At September 30, 2021, cumulative impairment losses on these securities were $40.5 million.

The following table summarizes the gross unrealized gains and losses and fair values for investments classified as available-for-sale investments (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2021
Corporate debt securities	$	—	$	—	$	—	$	—
Total	$	—	$	—	$	—	$	—
December 31, 2020
Corporate debt securities	$	511	$	152	$	—	$	663
Total	$	511	$	152	$	—	$	663

The Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported as a component of other comprehensive income.

The following table summarizes the Company’s corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands):

	September 30, 2021		December 31, 2020
Due within 1 year	$	—	$	663
Due within more than 1 year but less than 5 years	—		—
Due within more than 5 years but less than 10 years	—		—
Due 10 years or after	—		—
Total	$	—	$	663

Recognition and Measurement of Credit Loss of Debt Securities

The Company adopted ASU 2016-13, Financial Instrument-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments in the first quarter of 2020. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. This ASU also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded though an allowance for credit losses rather than a reduction in amortized cost basis of the securities. These changes will result in earlier recognition of credit losses, if any.

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

There were no investments in an unrealized loss position as of December 31, 2020.

As of December 31, 2020, the Company did not recognize any credit losses related to debt securities.

On September 25, 2017, the Company entered into a commitment to invest $200 million (approximately 76.6% of equity) in the OCV Fund. The primary purpose of the Fund is to provide a limited number of select investors with the opportunity to realize long-term appreciation from public and private companies, with a particular focus on the technology and life science industries. The general activities of the OCV Fund is to buy, sell, hold and otherwise invest in securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures and evidence of indebtedness; to exercise all rights, powers, privileges and other incidents of ownership or possession with respect to securities held or owned by the OCV Fund; to enter into, make and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable or desirable to carry out the foregoing.

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

In the first nine months of 2021, the Company received capital call notices from the management of OCV Management, LLC for $21.2 million, inclusive of certain management fees, of which $21.2 million has been paid for the nine months ended September 30, 2021. In the first nine months of 2020, the Company received capital call notices from the management of OCV Management, LLC for $31.0 million, inclusive of certain management fees, of which $30.0 million had been paid for the nine months ended September 30, 2020.

During the three and nine months ended September 30, 2021, the Company received distributions from OCV of $15.3 million and $15.3 million, respectively.

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

During the three months ended September 30, 2021 and 2020, the Company recognized an investment loss of $(1.9) million and $(0.7) million, net of tax benefit, respectively, and during the nine months ended September 30, 2021 and 2020, the Company recognized an investment gain (loss) of $16.6 million and $(10.8) million, net of tax (benefit) expense, respectively. The fiscal 2021 gain was primarily the result of gains in the underlying investments. The fiscal 2020 loss was primarily a result of the impairment of two of its investments as a result of COVID-19 in the amount of $7.0 million, net of tax benefit. In addition, The Company recognized an investment loss in the amount of $3.8 million, net of tax benefit. The loss is presented in the Company’s Condensed Consolidated Statement of Operations as income (loss) from equity method investment, net.

During the three months ended September 30, 2021 and 2020, the Company recognized management fees of $0.8 million and $0.8 million, net of tax benefit, respectively, and for the nine months ended September 30, 2021 and 2020, the Company recognized management fees of $2.3 million and $2.3 million, net of tax benefit, respectively.

The following table discloses the carrying amount for the Company’s equity method investment (in thousands):

	September 30, 2021		December 31, 2020
Equity method investment	$	96,097	$	67,195
Maximum exposure to loss	$	96,097	$	67,195

As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership. In addition, the Company is not required to contribute capital in an aggregate amount in excess of its capital commitment and any expected losses will not be in excess of the Capital Account. Finally, there are no call or put options, or other types of arrangements, which limit the Company’s ability to participate in losses and returns of the Fund.

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Dispositions

9 Months Ended

Sep. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

Dispositions

Dispositions

During the first quarter of 2021, the Company committed to a plan to sell certain Voice assets in the United Kingdom as they were determined to be non-core assets. Such assets were recorded within the Voice, Backup, Security, and CPP reportable segment. On February 9, 2021, in a cash transaction, the Company sold the Voice assets. As of September 30, 2021, the total gain recognized on the sale was $2.8 million which was recorded in (loss) gain on sale of businesses on the Condensed Consolidated Statement of Operations.

During the first quarter of 2021, the Company committed to a plan to sell its B2B Backup business as it was determined to be a non-core business. The B2B Backup business met the held for sale criteria, and accordingly, the assets and liabilities were presented as held for sale on the Condensed Consolidated Statement of Operations at March 31, 2021 and June 30, 2021. The business is recorded within the Voice, Backup, Security, and CPP reportable segment. During the second quarter of 2021, the Company received an offer to purchase the B2B Backup business and management determined that the fair value of the business less cost to sell was lower than its carrying amount. As a result, the Company recorded an impairment to goodwill of $32.6 million during the second quarter of 2021, which was recorded in impairment of business on the Condensed Consolidated Statement of Operations (see Note 8 - Goodwill and Intangible Assets). On September 17, 2021, in a cash transaction, the Company sold the B2B Backup business. As of September 30, 2021, the total loss recognized on the sale was $24.6 million which was recorded in loss on sale of business on the Condensed Consolidated Statement of Operations.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

§	Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
§	Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
§	Level 3 – Unobservable inputs which are supported by little or no market activity.

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

The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices. The fair value of long-term debt is determined using recent quoted market prices or dealer quotes for each of the Company’s instruments, which are Level 1 inputs. The fair value of the Company’s debt instruments at September 30, 2021 and December 31, 2020 was $2.0 billion and $2.0 billion, respectively (see Note 9 - Debt).

Certain of the Company’s debt securities are classified within Level 2. The Company values these Level 2 investments based on model-driven valuations using significant inputs derived from or corroborated by observable market data.

The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. For similar reasons, certain of the Company’s available-for-sale debt securities are classified within Level 3. The valuation approaches used to value the Level 3 investments consider unobservable inputs in the market such as time to liquidity, volatility, dividend yield, and breakpoints. Significant increases or decreases in either of the inputs in isolation would result in a significantly lower or higher fair value measurement.

The following table presents the fair values, valuation techniques, unobservable inputs, and ranges of the Company’s financial liabilities categorized within Level 3. The weighted averages below are a product of the unobservable input and fair value of the contingent consideration arrangement as of September 30, 2021.

	Valuation Technique	Unobservable Input	Range	Weighted Average
Contingent Consideration	Option-Based Model	Risk free rate	1.9% - 2.2%	2.0	%
		Debt spread	0.0% - 74.7%	13.6	%
		Probabilities	100.0%	100.0	%
		Present value factor	2.2% - 26.9%	15.4	%
		Discount rate	27.3% - 38.0%	32.3	%

The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):

September 30, 2021	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	10,391	$	—	$	—	$	10,391	$	10,391
Corporate debt securities	—		—		—		—		—
Total assets measured at fair value	$	10,391	$	—	$	—	$	10,391	$	10,391
Liabilities:
Contingent consideration	$	—	$	—	$	9,296	$	9,296	$	9,296
Debt	1,975,779		—		—		1,975,779		1,678,753
Total liabilities measured at fair value	$	1,975,779	$	—	$	9,296	$	1,985,075	$	1,688,049
December 31, 2020	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	10,413	$	—	$	—	$	10,413	$	10,413
Corporate debt securities	—		663		—		663		663
Total assets measured at fair value	$	10,413	$	663	$	—	$	11,076	$	11,076
Liabilities:
Contingent consideration	$	—	$	—	$	9,094	$	9,094	$	9,094
Debt	1,960,527		—		—		1,960,527		1,579,021
Total liabilities measured at fair value	$	1,960,527	$	—	$	9,094	$	1,969,621	$	1,588,115

The following table presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands):

	Level 3		Affected line item in the Statement of Operations
Balance as of January 1, 2021	$	9,094
Contingent consideration	6,600
Total fair value adjustments reported in earnings	(567)		General and administrative
Contingent consideration payments	(5,831)		Not applicable
Balance as of September 30, 2021	$	9,296

In connection with the Company’s acquisition activity, contingent consideration of up to $14.9 million may be payable upon achieving certain revenue, and/or unique visitor thresholds and had a combined fair value of $9.3 million and $9.1 million at September 30, 2021 and December 31, 2020, respectively. Due to the achievement of certain thresholds, $5.8 million was paid in the first nine months of 2021.

During the nine months ended September 30, 2021, the Company recorded a decrease in the fair value of the contingent consideration of $0.6 million and reported such decrease in general and administrative expenses.

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

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

The changes in carrying amounts of goodwill for the nine months ended September 30, 2021 are as follows (in thousands):

	Fax and Martech		Voice, Backup, Security and CPP		Total Cloud Services		Digital Media		Consolidated
Balance as of January 1, 2021	$	425,471	$	499,025	$	924,496	$	942,934	$	1,867,430
Goodwill acquired (Note 4)	41,152		—		41,152		44,400		85,552
Goodwill removed due to sale of businesses (1)	—		(50,276)		(50,276)		—		(50,276)
Goodwill impairment (2)	—		(32,629)		(32,629)		—		(32,629)
Purchase accounting adjustments (3)	—		505		505		(1,468)		(963)
Foreign exchange translation	(3,462)		(3,890)		(7,352)		(430)		(7,782)
Balance as of September 30, 2021	$	463,161	$	412,735	$	875,896	$	985,436	$	1,861,332

(1) On February 9, 2021, in a cash transaction, the Company sold certain of its Voice assets in the United Kingdom which resulted in $1.3 million of goodwill being removed in connection with this sale and on September 17, 2021, the Company sold certain of its B2B Backup assets which resulted in $49.0 million of goodwill being removed in connection with the sale (see Note 6 - Dispositions).

(2) During the nine months ended September 30, 2021, the Company had an impairment to goodwill of $32.6 million in connection with certain B2B Backup assets.

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

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of September 30, 2021 and December 31, 2020 as follows (in thousands):

	September 30, 2021		December 31, 2020
Trade names	$	27,412	$	27,460
Other	4,317		4,329
Total	$	31,729	$	31,789

Intangible Assets Subject to Amortization:

As of September 30, 2021, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	9.7 years	$	258,382	$	107,472	$	150,910
Patent and patent licenses	5.4 years	67,962		67,250		712
Customer relationships (1)	8.6 years	764,852		462,955		301,897
Other purchased intangibles	4.2 years	468,934		313,020		155,914
Total		$	1,560,130	$	950,697	$	609,433

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

As of December 31, 2020, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.0 years	$	260,715	$	100,273	$	160,442
Patent and patent licenses	5.5 years	67,980		66,964		1,016
Customer relationships (1)	8.0 years	848,875		471,681		377,194
Other purchased intangibles	4.3 years	436,352		265,224		171,128
Total		$	1,613,922	$	904,142	$	709,780

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

Amortization expense, included in general and administrative expense, approximated $47.8 million and $41.2 million for the three months ended September 30, 2021 and 2020, respectively, and $144.3 million and $115.6 million for the nine months ended September 30, 2021 and 2020, respectively. Amortization expense is estimated to approximate $43.8 million, $143.5 million, $123.2 million, $80.2 million and $75.1 million for the remaining three months of fiscal year 2021 through fiscal year 2025, respectively, and $143.6 million thereafter through the duration of the amortization period.

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Debt

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt

Debt

The Company’s debt as of September 30, 2021 and December 31, 2020 consists of the following (in thousands):

	September 30, 2021		December 31, 2020
4.625% Senior Notes	$	750,000	$	750,000
Convertible Notes:
3.25% Convertible Notes	—		402,414
1.75% Convertible Notes	550,000		550,000
Total Notes	1,300,000		1,702,414
Paycheck Protection Program Loan	—		910
Bridge Loan	485,000		—
Less: Unamortized discount	(96,429)		(112,798)
Deferred issuance costs	(9,818)		(11,505)
Total debt	1,678,753		1,579,021
Less: current portion	(568,054)		(396,801)
Total long-term debt, less current portion	$	1,110,699	$	1,182,220

4.625% Senior Notes

On October 7, 2020, the Company completed the issuance and sale of $750 million aggregate principal amount of its 4.625% senior notes due 2030 (the“4.625% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933. The Company received proceeds of $742.7 million after deducting the initial purchasers’ discounts, commissions and offering expenses. The net proceeds were used to redeem all of its outstanding 6.0% Senior Notes due in 2025 and, remaining net proceeds were available for general corporate purposes which may include acquisitions and the repurchase or redemption of other outstanding indebtedness.

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

The Company may redeem some or all of the 4.625% Senior Notes at any time on or after October 15, 2025 at specified redemption prices plus accrued and unpaid interest, if any, to, but excluding the redemption date. Before October 15, 2023, and following certain equity offerings, the Company also may redeem up to 40% of the 4.625% Senior Notes at a price equal to 104.625% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding the redemption date. The Company may make such redemption only if, after such redemption, at least 50% of the aggregate principal amount of the 4.625% Senior Notes remains outstanding. In addition, at any time prior to October 15, 2025, the Company may redeem some or all of the 4.625% Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium.

The Indenture contains covenants that restrict the Company’s ability to (i) pay dividends or make distributions on the Company’s common stock or repurchase the Company’s capital stock; (ii) make certain restricted payments; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants contain certain exceptions. Restricted payments are applicable only if the Company and subsidiaries designated as restricted subsidiaries have a net leverage ratio of greater than 3.5 to 1.0. In addition, if such net leverage ratio is in excess of 3.5 to 1.0, the restriction on restricted payments is subject to various exceptions, including the total aggregate amount not exceeding the greater of (A) $250 million and (B) 50.0% of EBITDA for the most recently ended four fiscal quarter period ended immediately prior to such date for which internal financial statements are available. The Company is in compliance with its debt covenants as of September 30, 2021.

On September 24, 2021, the Company announced the commencement of a cash tender offer for up to a maximum aggregate amount of $90.0 million of its 4.625% Senior Notes. Accordingly, as of September 30, 2021, the Company has classified $83.3 million of its 4.625% Senior Notes as short-term on its Condensed Consolidated Balance Sheet as of September 30, 2021.The remainder of the 4.625% Senior Notes are presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheet as of September 30, 2021.

As of September 30, 2021 and December 31, 2020, the estimated fair value of the 4.625% Senior Notes was approximately $797.9 million and $796.9 million, and was based on recent quoted market prices or dealer quotes for the 4.625% Senior Notes which are Level 1 inputs (see Note 7 - Fair Value Measurements).

3.25% Convertible Notes

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

In connection with the spin-off of Consensus, the Company called its 3.25% Convertible Notes for redemption and on August 2, 2021, the Company redeemed in full all of its outstanding 3.25% Convertible Notes. During the three and nine months ended September 30, 2021, the Company satisfied its conversion obligation by paying the principal of $399.6 million and $402.4 million, respectively, in cash and issued 3,031,817 and 3,050,850 shares of the Company’s common stock. respectively (see Note 13 - Stockholders’ Equity).

The 3.25% Convertible Notes were carried at face value less any unamortized debt discount and debt issuance costs. The fair value of the 3.25% Convertible Notes at each balance sheet date was determined based on recent quoted market prices or dealer quotes for the 3.25% Convertible Notes, which are Level 1 inputs (see Note 7 - Fair Value Measurements). If such information was not available, the fair value was determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of September 30, 2021 and December 31, 2020, the estimated fair value of the 3.25% Convertible Notes was approximately zero and $593.1 million, respectively.

1.75% Convertible Notes

On November 15, 2019, the Company issued $550.0 million aggregate principal amount of 1.75% convertible senior notes due November 1, 2026 (the “1.75% Convertible Notes”). the Company received proceeds of $537.1 million in cash, net of purchasers’ discounts and commissions and other debt issuance costs. A portion of the net proceeds were used to pay off all amounts outstanding under the then-existing Credit Facility. The 1.75% Convertible Notes bear interest at a rate of 1.75% per annum, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2020. The 1.75% Convertible Notes will mature on November 1, 2026, unless earlier converted or repurchased.

Holders may surrender their 1.75% Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding July 1, 2026 only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on March 31, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding the calendar quarter is greater than 130% of the applicable conversion price of the 1.75% Convertible Notes on each such applicable trading day; (ii) during the five business day period following any 10 consecutive trading day period in which the trading price per $1,000 principal amount of 1.75% Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after July 1, 2026, and prior to the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their notes at any time, regardless of the foregoing circumstances. The Company will settle conversions of the 1.75% Convertible Notes by paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination thereof at the Company’s election. The Company currently intends to satisfy its conversion obligation by paying and delivering a combination of cash

and shares of the Company’s common stock. Holders of the notes will have the right to require the Company to repurchase for cash all or any portion of their notes upon the occurrence of certain corporate events, subject to certain conditions. During the third quarter of 2021 and the fourth quarter of 2020, the last reported sale price of the Company’s common stock did not meet the conversion price threshold requirements of the 1.75% Convertible Notes. Therefore, the net carrying amount of the 1.75% Convertible Notes is classified as long-term debt on the Condensed Consolidated Balance Sheets.

As of September 30, 2021, the conversion rate is 7.9864 shares of the Company’s common stock for each $1,000 principal amount of 1.75% Convertible Notes, which represents an conversion price of approximately $125.21 per share of the Company’s common stock. The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the 1.75% Convertible Notes, but will not be adjusted for accrued interest. In addition, upon the occurrence of a “Make-Whole Fundamental Change” (as defined in the 1.75% Convertible Note Indenture), the Company will increase the conversion rate for a holder that elects to convert its 1.75% Convertible Notes in connection with such a corporate event in certain circumstances.

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

The 1.75% Convertible Notes are the Company’s general senior unsecured obligations and rank: (i) senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 1.75% Convertible Notes; (ii) equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated, including its existing 3.25% Convertible Notes due 2029; (iii) effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries, including the then-existing 6.0% Senior Notes due 2025.

Accounting for the 1.75% Convertible Notes

In accordance with ASC 470-20, Debt with Conversion and Other Options, convertible debt that can be settled for cash is required to be separated into the liability and equity component at issuance, with each component assigned a value. The value assigned to the liability component is the effective fair value, as of the issuance date, of similar debt without the conversion feature. The difference between the cash proceeds and estimated fair value of the liability component, representing the value of the conversion premium assigned to the equity component, is recorded as a debt discount on the issuance date. This debt discount is amortized to interest expense using the effective interest method over the period from the issuance date through the maturity date of November 1, 2026.

The Company estimated the borrowing rates of similar debt without the conversion feature at origination to be 5.5% for the 1.75% Convertible Notes and determined the debt discount to be $118.9 million. As a result, a conversion premium after tax of $88.1 million (net of $2.8 million of the deferred issuance costs) are recorded in additional paid-in capital. The aggregate debt discount is amortized as interest expense over the period from the issuance date through the maturity date of November 1, 2026, which management believes is the expected life of the 1.75% Convertible Notes using an interest rate of 5.5%. As of September 30, 2021, the remaining period over which the unamortized debt discount will be amortized is 5.1 years.

In connection with the issuance of the 1.75% Convertible Notes, the Company incurred $12.9 million of deferred issuance costs, which primarily consisted of the underwriters’ discount, legal and other professional service fees. Of the total deferred issuance costs incurred, $10.1 million of such deferred issuance costs were attributable to the liability component and are recorded within other assets and are being amortized to interest expense through the maturity date. The remaining $2.8 million of the deferred issuance costs were netted with the equity component in additional paid-in capital at the issuance date. As of September 30, 2021, the unamortized deferred issuance costs were $8.0 million.

The 1.75% Convertible Notes are carried at face value less any unamortized debt discount and issuance costs. The fair value of the 1.75% Convertible Notes at each balance sheet date is determined based on recent quoted market prices or dealer quotes for the 1.75% Convertible Notes, which are Level 1 inputs (see Note 7 - Fair Value Measurements). If such information is not available, the fair value is determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of September 30, 2021 and December 31, 2020, the estimated fair value of the 1.75% Convertible Notes was approximately $692.9 million and $569.7 million, respectively.

Credit Facility and Bridge Loan

On April 7, 2021, the Company entered into a $100.0 million Credit Agreement (the “Credit Agreement”). Subject to customary conditions, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250.0 million, for a total aggregate commitment of up to $350.0 million. The final maturity of the Credit Facility will occur on April 7, 2026.

On June 2, 2021, June 21, 2021, August 20, 2021 and September 16, 2021, the Company entered into First, Second, Third and Fourth Amendments (together the “Amendments”) to the Credit Agreement. The Amendments (i) provided for the issuance of a senior secured term loan under the Credit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of the Company’s cloud fax business into a new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement.

The Bridge Loan Facility bore interest at a rate per annum equal to (i) initially upon funding of the loan, either a base rate plus 2.00%, or a LIBOR rate plus 3.00%, (ii) from six months after the funding date of the Bridge Loan Facility until twelve months after the funding date of the Bridge Loan Facility, either a base rate plus 2.50%, or a LIBOR rate plus 3.50%, and (iii) from twelve months after the funding date of the Bridge Loan Facility until repayment of the Bridge Loan Facility, either a base rate plus 3.00% or a LIBOR rate plus 4.00%. The Bridge Loan Facility was to mature on the date that is 364 days after the funding date of the Bridge Loan Facility, with two automatic extensions, each for an additional three months, if SEC approval of the spin-off transaction was still outstanding. As of September 30, 2021, the Company had drawn on the full amount of the Bridge Loan Facility with $485.0 million outstanding. The proceeds of the Bridge Loan Facility were used to redeem the Company’s 3.25% Convertible Notes. As of September 30, 2021, the estimated fair value of the Bridge Loan Facility was $485.0 million. Refer to Note 18 - Subsequent Events for information on the extinguishment of the Bridge Loan subsequent to September 30, 2021 in connection with the spin-off of the cloud fax business.

The Company was required to pay a funding fee of 0.50% of the aggregate principal amount of Bridge Loan Facility made on the funding date thereof, as well as a duration fee of 0.25% of the aggregate principal amount of outstanding Bridge Loans on the sixth month anniversary of the funding of the Bridge Loans, and a fee of 0.50% of the aggregate principal amount of outstanding Bridge Loans on each of the nine-month, twelve-month and fifteen-month anniversaries of the funding of the Bridge Loans.

Paycheck Protection Program Loan

Through the acquisition of certain businesses in 2020, the Company acquired $0.9 million of outstanding debt originating from the Paycheck Protection Program. During the second quarter of 2021, the Company received approval from the SBA to forgive the entire amount of the outstanding PPP loans, which was subsequently forgiven in full.

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Leases

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

Leases

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

For the first nine months of 2021, the Company recorded impairments of $9.4 million on its operating lease right of use assets primarily related to exiting certain lease space as the Company regularly evaluates its office space requirements in light more of its workforce working from home as part of a permanent “remote” or “partial remote” work model. During the third quarter of 2020, the Company had also decided to exit and seek subleases for certain leased facilities in the Digital Media reportable segment primarily also due to work from home models. The Company recorded a non-cash impairment charge of $9.8 million related to operating lease right-of-use assets for the affected facilities and an impairment charge of $3.6 million for associated property and equipment. The impairments were determined by comparing the fair value of the impacted right-of-use asset to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment. The fair value of the right-of-use asset was based on the estimated sublease income for the affected facilities taking into consideration the time it will take to obtain a sublease tenant, the applicable discount rate and the sublease rate which represent Level 3 unobservable inputs. The impairments are presented in general and administrative expenses on the Condensed Consolidated Statements of Operations.

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

Finance leases are not material to the Company’s Condensed Consolidated Financial Statements and are therefore not included in the disclosures below.

The components of lease expense were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating lease cost	$	6,173	$	16,888	$	23,976	$	33,106
Short-term lease cost	712		264		2,653		1,357
Total lease cost	$	6,885	$	17,152	$	26,629	$	34,463

Supplemental balance sheet information related to leases was as follows (in thousands):

	September 30, 2021		December 31, 2020
Operating leases
Operating lease right-of-use assets	$	88,331	$	105,845
Total operating lease right-of-use assets	$	88,331	$	105,845
Operating lease liabilities, current	$	31,636	$	32,211
Operating lease liabilities, noncurrent	84,519		99,177
Total operating lease liabilities	$	116,155	$	131,388

Supplemental cash flow information related to leases was as follows (in thousands):

	Nine Months Ended September 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	21,869	$	21,764
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	9,274	$	7,968

Other supplemental operating lease information consists of the following:

	September 30, 2021		December 31, 2020
Operating leases:
Weighted average remaining lease term	5.1 years		5.2 years
Weighted average discount rate	3.83	%	3.93	%

Maturities of operating lease liabilities as of September 30, 2021 were as follows (in thousands):

	Operating Leases
Fiscal Year:
2021 (remainder)	$	8,507
2022	31,926
2023	26,494
2024	18,840
2025	10,496
Thereafter	35,250
Total lease payments	$	131,513
Less: Imputed interest	15,358
Present value of operating lease liabilities	$	116,155

Total sublease income for the three months ended September 30, 2021 and 2020 was $0.5 million and $0.4 million, respectively, and was $1.4 million and $2.2 million for the nine months ended September 30, 2021 and 2020, respectively. Total estimated aggregate sublease income to be received in the future is $5.2 million.

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

Significant Judgments

Discount Rate

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

Options

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

Practical Expedients

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

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

•not reassess whether expired or existing contracts contain leases under the new definition of a lease;

•not reassess lease classification for expired or existing leases; and

•not reassess whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

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

On January 21, 2016, Davis Neurology, P.A. filed a putative class action lawsuit against two Company affiliates in the Circuit Court for the County of Pope, State of Arkansas (58-cv-2016-40), alleging violations of the TCPA. The case was removed to the U.S. District Court for the Eastern District of Arkansas (No. 4:16-cv-00682). On March 20, 2017, the District Court granted a motion for judgment on the pleadings filed by the Company affiliates and dismissed all claims against the Company affiliates. On July 23, 2018, the Eighth Circuit Court of Appeals vacated the judgment and remanded to district court with instructions to return the case to state court. On January 29, 2019, after further appeals were exhausted, the case was remanded to the Arkansas state court. On April 1, 2019, the state court granted a motion for class certification filed by the plaintiff in 2016. Because the prior removal to federal court had deprived the state court of jurisdiction, the Company affiliates had not yet filed an opposition brief to the 2016 motion when the state court granted the motion. The Company affiliates appealed the order. On July 15, 2019, the Company affiliates removed the case to federal court pursuant to the Class Action Fairness Act of 2005. On November 26, 2019 the court denied the Plaintiff’s motion to remand. On December 20, 2019, the court granted the Plaintiff’s motion for leave to amend its complaint. On May 21, 2020, the court denied the Company affiliates’ motion to dismiss. On February 18, 2021, the parties filed a motion for preliminary approval of the class settlement, certification of a settlement class and for permission to disseminate notice, which was granted on May 11, 2021. On September 3, 2021, the court granted final approval of the class settlement.

On July 8, 2020, Jeffrey Garcia filed a putative class action lawsuit against the Company in the Central District of California (20-cv-06906), alleging violations of federal securities laws. The Company has moved to dismiss the consolidated class action complaint. The court granted the motion to dismiss and the plaintiff has filed an amended complaint. The Company has moved to dismiss the amended complaint.

On September 24, 2020, International Union of Operating Engineers of Eastern Pennsylvania and Delaware filed an action lawsuit in the Delaware Court of Chancery (C.A. No. 2020-0819-VCL) asserting derivative claims for breach of fiduciary duty and related theories against directors of the Company and other third parties relating generally the investment by the Company in OCV Fund I, L.P. (the “Chancery Court Derivative Action”). On November 17, 2020, the court entered an order allowing Orlando Police Pension Fund to intervene as a plaintiff in the case. The parties have reached an agreement to settle the lawsuit, which requires court approval. On July 29, 2021, the parties filed a stipulation of settlement that provides the terms of the settlement and begins the settlement approval process with the Court.

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

On March 24, 2021, Fritz Ringling filed a lawsuit in the District of Delaware (21-cv-00421-UNA) asserting substantially similar derivative claims, and on April 8, 2021, the district court consolidated the two actions under the caption In re J2 Global Stockholder Derivative Litigation. No.: 20-cv-01687-LPS. As part of the settlement of the Chancery Court Derivative Action described above, the Company and its directors and officers intend to defend against the remaining claims.

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

The Company has not accrued for any material loss contingencies relating to these legal proceedings because materially unfavorable outcomes are not considered probable by management. It is the Company’s policy to expense as incurred legal fees related to various litigations.

Non-Income Related Taxes

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

The Company is currently under audit or is subject to audit for indirect taxes in various states, municipalities and foreign jurisdictions. The Company has a $24.4 million reserve established for these matters. It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a material impact to our financial results.

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Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate adjusted for discrete interim period tax impacts. Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. The Company’s effective tax rate was 16.6% and 28.3% for the three months ended September 30, 2021 and 2020, respectively and 12.3% and 32.2% for the nine months ended September 30, 2021 and 2020, respectively. The Company’s decreased rate during the three and nine months ended September 30, 2021 is primarily due to the recognition of a tax benefit from the disposition and impairment of the backup business to business unit and a reduction in our net reserve for uncertain tax positions with no similar events for the period ending September 30, 2020. During the nine months ended September 30, 2020 the Company recognized an increase in tax expense related to establishing a valuation allowance on deferred tax assets related to the impairment of certain investments with no similar events for the period ending September 30, 2021. During the three and nine months ended September 30, 2021, in connection with the redemption of the 3.25% Convertible Notes, the Company recorded a reduction in its deferred tax liabilities and an increase in additional paid-in capital of approximately $44.2 million. As the redemption of the 3.25% Convertible Notes were settled in cash and equity for an amount in excess of the Company’s tax basis in the 3.25% Convertible Notes, the deferred tax liability was reversed with an adjustment to additional-paid-in capital. Prior to the redemption, the Company had a deferred tax liability on the 3.25% Convertible Notes for cumulative book-tax temporary differences related to interest expense that resulted in the tax basis exceeding the financial statement carrying amount of the 3.25% Convertible Notes.

Income (loss) before income taxes included income from domestic operations of $29.2 million and $32.2 million for the nine months ended September 30, 2021 and 2020, respectively, and income from foreign operations of $107.1 million and $120.2 million for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021 and December 31, 2020, the Company had $54.2 million and $57.1 million, respectively, in liabilities for uncertain income tax positions. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s consolidated statement of operations.

Cash paid for income taxes net of refunds received was $51.8 million and $33.5 million for the nine months ended September 30, 2021 and 2020, respectively.

Certain taxes are prepaid during the year and, where appropriate, included within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheet. The Company’s prepaid taxes were $12.6 million and $3.0 million at September 30, 2021 and December 31, 2020, respectively.

Income Tax Audits:

The Company is in various stages of audit by the U.S. Internal Revenue Service (“IRS”) for its 2012 through 2016 tax years. On February 24, 2021, the Company received a Notice of Deficiency for tax years 2012 through 2014 which disallowed certain deductions for domestic production. The Company disagrees with the Notice and filed a petition to appeal on May 24, 2021. As of September 30, 2021, the audits are ongoing.

The Company is under income tax audit by the California Franchise Tax Board (the “FTB”) for its tax years 2012 and 2013. The FTB, however, has suspended its audit for 2012 and 2013 pending the outcome of the IRS audit for such tax years. In August 2018, the FTB notified the Company that it will commence an audit of tax years 2015 and 2016. As of September 30, 2021, the audits are ongoing.

In June 2019, the New York State Department of Taxation and Finance (“NYS”) notified the Company that it will commence an audit for tax year 2015. In April 2020, the NYS notified the Company that it will also commence an audit for tax years 2016 and 2017. As of September 30, 2021, the audits are ongoing.

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

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Stockholders' Equity

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Common Stock Repurchase Program

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

In November 2018 and May 2019, the Company entered into Rule 10b5-1 trading plans with a broker to facilitate the repurchase program. 600,000 shares were repurchased under the share repurchase program in 2018 at an aggregate cost of $42.5 million and were subsequently retired in March 2019. During the year ended December 31, 2019, the Company repurchased 197,870 shares at an aggregate cost of $16.0 million which were subsequently retired in the same year. During the year ended December 31, 2020, the Company repurchased 1,140,819 shares under this program at an aggregate cost of $87.5 million, which were subsequently retired in the same year. As of December 31, 2020, all the available shares were repurchased under the 2012 Program at an aggregate cost of $204.6 million (including an immaterial amount of commission fees).

On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to ten million shares of our common stock through August 6, 2025 (the “2020 Program”) in addition to the five million shares repurchased under the 2012 Program. The Company entered into a Rule 10b5-1 trading plan and during the nine month period ended September 30, 2021, the Company repurchased no shares under this program. Cumulatively at September 30, 2021, 2,490,599 shares were repurchased at an aggregate cost of $177.8 million (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired.

In connection with the Consensus spin-off, the Company called its 3.25% Convertible Notes for redemption and during the three and nine months ended September 30, 2021, the Company issued 3,031,817 and 3,050,850 shares of the Company’s common stock, respectively, in connection with that redemption (see Note 9 - Debt).

Periodically, participants in the Company’s stock plans surrender to the Company shares of stock to pay the exercise price or to satisfy tax withholding obligations arising upon the exercise of stock options or the vesting of restricted stock. During the three month period ended September 30, 2021, the Company purchased 49,641 shares from plan participants for this purpose.

Dividends

No dividends were declared in during fiscal year 2021 and 2020. Future dividends are subject to Board approval. Based on the significant number of current investment opportunities within the Company’s portfolio of businesses and the historic returns from prior investments, the Board of Directors suspended dividend payments for the foreseeable future.

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Stock Options and Employee Stock Purchase Plan

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock Options and Employee Stock Purchase Plan

Stock Options and Employee Stock Purchase Plan

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

The 2007 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. 4,500,000 shares of the Company’s common stock are authorized to be used for 2007 Plan purposes. Options under the 2007 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the fair market value of the Company’s common stock on the date of grant for incentive stock options and not less than 85% of the fair market value of the Company’s common stock on the date of grant for non-statutory stock options. As of September 30, 2021, 7,000 shares underlying options and zero shares of restricted units were outstanding under the 2007 Plan. The 2007 Plan terminated on February 14, 2017.

The 2015 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units and other share-based awards. 4,200,000 shares of the Company’s common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of the Company’s common stock subject to the option on the date the option is granted. As of September 30, 2021, 400,000 shares underlying options and 246,018 shares of restricted stock units were outstanding under the 2015 Plan.

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

Stock Options

The following table represents stock option activity for the nine months ended September 30, 2021:

	Number of Shares	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021	475,601	$	69.61
Granted	—	—
Exercised	(68,601)	42.08
Canceled	—	—
Outstanding at September 30, 2021	407,000	$	74.25	6.2	$	25,385,630
Exercisable at September 30, 2021	157,000	$	73.00	6.0	$	9,988,130
Vested and expected to vest at September 30, 2021	346,640	$	74.11	6.1	$	21,668,058

The total intrinsic values of options exercised during the nine months ended September 30, 2021 and 2020 were $5.6 million and $3.0 million, respectively.

The Company recognized $0.2 million and $0.2 million of compensation expense related to stock options for the three months ended September 30, 2021 and 2020, respectively, and $0.6 million and $0.7 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021 and December 31, 2020, unrecognized stock compensation related to non-vested stock options granted under each of the share-based compensation plans approximated $5.1 million and $5.8 million, respectively. Unrecognized stock compensation expense related to non-vested stock options granted under these plans is expected to be recognized ratably over a weighted-average period of 4.3 (i.e., the remaining requisite service period).

Fair Value Disclosure

The Company uses the Black-Scholes option pricing model to calculate the fair value of each option grant. The expected volatility is based on historical volatility of the Company’s common stock. The Company estimates the expected term based upon the historical exercise behavior of its employees. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 12.4% and 11.8% as of September 30, 2021 and 2020, respectively.

 Restricted Stock and Restricted Stock Units

The Company has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to certain share-based compensation plans. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, four or five years for senior staff (excluding market-based awards discussed below) and eight years for the Chief Executive Officer.

Restricted Stock and Restricted Stock Units with Market Conditions

The Company has awarded certain key employees market-based restricted stock and restricted stock units pursuant to the 2015 Plan. The market-based shares have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20-day and 30-day lookback (trading days). Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the nine months ended September 30, 2021 and 2020, the Company awarded 73,094 and 82,112 market-based shares, respectively. The per share weighted average grant-date fair values of the market-based shares granted during the nine months ended September 30, 2021 and 2020 were $94.40 and $70.99, respectively.

The weighted-average fair values of market-based shares granted have been estimated utilizing the following assumptions:

	September 30, 2021			September 30, 2020
Underlying stock price at valuation date	$	113.27		$	91.17
Expected volatility	30.3		%	27.0		%
Risk-free interest rate	1.3		%	0.7		%

Restricted stock award activity for the nine months ended September 30, 2021 is set forth below:

	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2021	820,566	$	62.66
Granted	—	—
Vested	(421,923)	62.47
Canceled	(3,277)	82.96
Nonvested at September 30, 2021	395,366	$	61.62

Restricted stock unit award activity for the nine months ended September 30, 2021 is set forth below:

	Number of Shares	Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021	209,784
Granted	164,257
Vested	(124,761)
Canceled	(3,262)
Outstanding at September 30, 2021	246,018	3.2	$	33,610,979
Vested and expected to vest at September 30, 2021	170,143	2.5	$	23,244,890

The Company recognized $5.7 million and $5.1 million of compensation expense related to restricted stock, restricted stock units and market-based awards for the three months ended September 30, 2021 and 2020, respectively, and $16.4 million and $16.4 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021 and December 31, 2020, the Company had unrecognized share-based compensation cost of approximately $37.3 million and $38.6 million, respectively, associated with these awards. This cost is expected to be recognized over a weighted-average period of 3.6 for awards and 4.1 for units.

Employee Stock Purchase Plan

The Purchase Plan provides for the issuance of a maximum of two million shares of the Company’s common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of the Company’s common stock at certain plan-defined dates. The price of the Company’s common stock purchased under the Purchase Plan for the offering periods is equal to 85% of the lesser of the fair market value of a share of common stock of the Company on the beginning or the end of the offering period.

The Company determined that a plan provision exists which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the ESPP. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 11.15% and 16.50% as of September 30, 2021 and 2020, respectively. The increase in forfeiture rate comes as a result of the Purchase Plan being offered to all employees regardless of employment location.

For the nine months ended September 30, 2021 and 2020, 58,145 and 53,694 shares were purchased under the Purchase Plan, respectively. Cash received upon the issuance of the Company’s common stock under the Purchase Plan was $4.2 million and $3.3 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, 1,346,794 shares were available under the Purchase Plan for future issuance.

The Company recognized $0.8 million and $0.5 million of compensation expense related to the Purchase Plan for the three months ended September 30, 2021 and 2020, respectively, and $2.1 million and $1.5 million for the nine months ended September 30, 2021 and 2020, respectively.

The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions:

	September 30, 2021	September 30, 2020
Risk-free interest rate	0.06%	0.13%
Expected term (in years)	0.5	0.5
Dividend yield	0.00%	0.00%
Expected volatility	35.62%	23.95%
Weighted average volatility	35.62%	23.95%

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Earnings Per Share

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator for basic and diluted net income per common share:
Net income	$	42,569	$	60,883	$	136,209	$	92,580
Net income available to participating securities (a)	(28)		(89)		(143)		(477)
Net income available to the Company’s common shareholders	$	42,541	$	60,794	$	136,066	$	92,103
Denominator:
Weighted-average outstanding shares of common stock	46,738,073		46,279,515		45,258,819		46,914,750
Dilutive effect of:
Equity incentive plans	332,532		29,557		272,178		23,211
Convertible debt (b)	1,511,980		—		2,034,065		682,347
Common stock and common stock equivalents	48,582,585		46,309,072		47,565,062		47,620,308
Net income per share:
Basic	$	0.91	$	1.31	$	3.01	$	1.96
Diluted	$	0.88	$	1.31	$	2.86	$	1.93

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

(b)Represents the incremental shares issuable upon conversion of the 3.25% Convertible Notes due June 15, 2029 (subsequently redeemed in full) and 1.75% Convertible Notes due November 1, 2026 by applying the treasury stock method when the average stock price exceeds the conversion price of the Convertible Notes (see Note 9 - Debt).

For the three months ended September 30, 2021 and 2020, there were zero and 423,000 options outstanding, respectively, and for the nine months ended September 30, 2021 and 2020, there were zero options outstanding, respectively, which were excluded from the computation of diluted earnings per share because the exercise prices were greater than the average market price of the common stock.

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Segment Information

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”) for making operating and investment decisions and for assessing performance. The CODM views the Company as two businesses: Digital Media and Cloud Services. However, in accordance with the aggregation criteria within ASC Topic 280, the Company’s operating segments have been aggregated into three reportable segments: (i) Digital Media; (ii) Voice, Backup, Security, and Consumer Privacy and Protection; and (iii) Fax and Martech.

The Company’s Digital Media business is driven primarily by advertising and subscription revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter. The Company’s Cloud Services business is driven primarily by subscription revenues that are relatively higher margin, stable and predictable from quarter to quarter with minor seasonal weakness in the fourth quarter.

The accounting policies of the businesses are the same as those described in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021. The Company evaluates performance based on revenue, gross margin and profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses.

Information on reportable segments and reconciliation to consolidated income from operations is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue by reportable segment:
Digital Media	$	262,429	$	186,784	$	743,280	$	513,462
Cloud Services
Fax and Martech	114,648		98,044		320,829		286,687
Voice, Backup, Security, and CPP	67,531		72,204		208,137		220,403
Cloud Services Total	182,179		170,248		528,966		507,090
Elimination of inter-segment revenues	(356)		(56)		(766)		(200)
Total segment revenues	444,252		356,976		1,271,480		1,020,352
Corporate (1)	—		—		—		1
Total revenues	$	444,252	$	356,976	$	1,271,480	$	1,020,353
Gross profit by reportable segment:
Digital Media	$	238,650	$	169,394	$	673,409	$	457,963
Cloud Services
Fax and Martech	91,993		81,435		261,742		238,149
Voice, Backup, Security, and CPP	49,395		50,392		151,155		152,733
Cloud Services Total	141,388		131,827		412,897		390,882
Elimination of inter-segment gross profit	(88)		(56)		(214)		(200)
Total segment gross profit	379,950		301,165		1,086,092		848,645
Corporate (1)	—		(11)		(74)		(47)
Total gross profit	$	379,950	$	301,154	$	1,086,018	$	848,598
Direct costs by reportable segment (2):
Digital Media (3)	$	188,950	$	143,312	$	548,960	$	410,109
Cloud Services
Fax and Martech (3)	42,057		28,614		107,109		89,121
Voice, Backup, Security, and CPP (3)	37,524		37,456		150,102		118,291
Cloud Services Total	79,581		66,070		257,211		207,412
Elimination of inter-segment direct costs	(88)		(56)		(214)		(200)
Total segment direct costs	268,443		209,326		805,957		617,321

Corporate (1)	15,366		14,390		43,785		25,552
Total direct costs (2)	$	283,809	$	223,716	$	849,742	$	642,873
Operating income by reportable segment:
Digital Media	$	49,700	$	26,082	$	124,449	$	47,854
Cloud Services
Fax and Martech	49,936		52,821		154,633		149,028
Voice, Backup, Security, and CPP	11,871		12,936		1,053		34,442
Cloud Services Total	61,807		65,757		155,686		183,470
Total segment operating income	111,507		91,839		280,135		231,324
Corporate (1)	(15,366)		(14,401)		(43,859)		(25,599)
Total income from operations	$	96,141	$	77,438	$	236,276	$	205,725
(1) Corporate includes costs associated with general and administrative and other expenses that are managed on a global basis and that are not directly attributable to any particular segment.
(2) Direct costs for each segment include other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expense, depreciation and amortization and other administrative expenses.
(3) Beginning in the third quarter of 2020, certain expenses associated with Corporate that were previously allocated to the Cloud Services business and the Digital Media business for shared costs incurred by Corporate were no longer allocated. Table above has been recast to remove the impact of certain expenses associated with Corporate that were previously allocated to the Cloud Services and Digital Media businesses.

The CODM does not use Balance Sheet and Cash Flow information in connection with operating and investment decisions other than as presented for Digital Media and Cloud Services. Accordingly, the following segment information is presented for Digital Media and Cloud Services.

	September 30, 2021		December 31, 2020
Assets:
Digital Media	$	1,978,252	$	2,088,397
Cloud Services	1,567,119		1,473,398
Total assets from Digital Media and Cloud Services	3,545,371		3,561,795
Corporate	285,286		103,536
Total assets	$	3,830,657	$	3,665,331
	Nine Months Ended September 30,
	2021		2020
Capital expenditures:
Digital Media	$	51,995	$	43,593
Cloud Services	35,500		27,673
Total capital expenditures from Digital Media and Cloud Services	87,495		71,266
Corporate	—		—
Total capital expenditures	$	87,495	$	71,266

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Depreciation and amortization:
Digital Media	$	50,056	$	36,651	$	147,482	$	101,771
Cloud Services	16,082		20,524		48,744		58,355
Total depreciation and amortization from Digital Media and Cloud Services	66,138		57,175		196,226		160,126
Corporate	79		2,437		217		3,554
Total depreciation and amortization	$	66,217	$	59,612	$	196,443	$	163,680

The Company maintains operations in the U.S., Canada, Ireland, Japan and other countries. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on jurisdictions where revenues are reported (in thousands).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
United States	$	366,778	$	296,054	$	1,018,277	$	827,520
Canada	19,574		17,728		59,957		51,298
Ireland	13,980		14,947		59,227		40,520
All other countries	43,920		28,247		134,019		101,015
	$	444,252	$	356,976	$	1,271,480	$	1,020,353

	September 30, 2021		December 31, 2020
Long-lived assets:
United States	$	834,129	$	918,125
All other countries	46,815		54,073
Total	$	880,944	$	972,198

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Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the three months ended September 30, 2021 (in thousands):

	Unrealized Gains (Losses) on Investments		Foreign Currency Translation		Total
Beginning balance	$	283	$	(60,257)	$	(59,974)
Other comprehensive income	(114)		(11,101)		(11,215)
Net current period other comprehensive income	(114)		(11,101)		(11,215)
Ending balance	$	169	$	(71,358)	$	(71,189)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the nine months ended September 30, 2021 (in thousands):

	Unrealized Gains (Losses) on Investments		Foreign Currency Translation		Total
Beginning balance	$	283	$	(55,089)	$	(54,806)
Other comprehensive loss	(114)		(16,269)		(16,383)
Net current period other comprehensive loss	(114)		(16,269)		(16,383)
Ending balance	$	169	$	(71,358)	$	(71,189)

There were no reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2021.

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Subsequent Events

9 Months Ended

Sep. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Consensus, Inc. Spin-Off

On October 7, 2021, the Separation of Consensus into an independent publicly traded company was completed and the Company transferred J2 Cloud Service, LLC to Consensus, Inc. who in turn transferred non-fax assets and liabilities back to Ziff Davis such that Consensus was left with the cloud fax business. The Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution. The Company’s stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock. On October 8, 2021, Consensus began trading on Nasdaq under the stock symbol “CCSI”. Ziff Davis, Inc. (“Ziff Davis”) (formerly J2 Global, Inc.) retained a 19.9% interest in Consensus following the Separation.

On October 7, 2021, in exchange for the equity interest in Consensus, Consensus paid Ziff Davis approximately $269.6 million of cash and issued $500.0 million of senior notes due 2028 to Ziff Davis and Ziff Davis exchanged such notes with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A. and MUFG Union Bank, N.A., as administrative agent for the lenders, in exchange for extinguishment of the $485.0 million of indebtedness outstanding under the Bridge Loan Facility (Refer to Note 9 - Debt). Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A.

On October 8, 2021, Ziff Davis announced that it had accepted tender offers to purchase $83.3 million in aggregate principal of its 4.625% Senior Notes for an aggregate purchase price of $90.0 million. The tender offer expired on October 22, 2021.

Corporate Name Change

On October 7, 2021, in connection with the spin-off of its cloud fax business discussed above, the Company changed its name from J2 Global, Inc. to Ziff Davis, Inc. Starting October 8, 2021, the Company’s common stock began trading under the stock symbol “ZD.”

Leadership Changes

In connection with the Separation, each of Doug Bech, Stephen Ross and Pamela Sutton-Wallace resigned as members of the Company’s board of directors, effective as of immediately prior to the Separation, to serve as directors of Consensus. Additionally, Scott Turicchi resigned as President and Chief Financial Officer, effective as of immediately prior to the effectiveness of the Separation. Mr. Turicchi serves as Chief Executive Officer of Consensus. On October 7, 2021, Steve Dunn was appointed the interim principal financial officer of Ziff Davis while Ziff Davis is engaging in a search process for a new chief financial officer.

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about investment classifications and the reported amounts of net revenue and expenses during the reporting period. The Company believes that its most significant estimates are those related to revenue recognition, valuation and impairment of investments, its assessment of ownership interests as variable interest entities and the related determination of consolidation, share-based compensation expense, fair value of assets acquired and liabilities assumed in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingencies

and allowances for doubtful accounts. On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances. Actual results could materially differ from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to the novel coronavirus pandemic (“COVID-19”).

Allowances for Doubtful Accounts

Allowances for Doubtful Accounts

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

Revenue Recognition

Revenue Recognition

The Company recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (see Note 3 - Revenues).

Principal vs. Agent

The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance under Topic 606 for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer and (ii) whether the Company controls the specified goods or services prior to transferring control to the customer.

Sales Taxes

The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer.

Digital Media

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

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

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

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

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

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

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

Cloud Services

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

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

Performance Obligations

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, revenues are allocated to each performance obligation based on its relative standalone selling price.

The Company satisfies its performance obligations within the Digital Media business upon delivery of services to its customers. In addition, the Company provides content to its advertising partners which the Company sells to its partners’ customer base and receives a revenue share based on the terms of the agreement.

The Company satisfies its performance obligations within the Cloud Services business upon delivery of services to its customers. Payment terms vary by type and location of our customers and the services offered. The term between invoicing and when payment is due is not significant. Due to the nature of the services provided, there are no obligations for returns.

Significant Judgments

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

Performance Obligations Satisfied Over Time

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

Advertising

•Website reporting by the Company, the customer, or a third-party contains the delivery evidence needed to satisfy the performance obligations within the advertising contract

•Successfully delivered leads are evidenced by either delivery reports from the Company’s internal lead management systems or through e-mail communication and/or other evidence of delivery showing acceptance of leads by the customer

•Commission is evidenced by direct site reporting from the affiliate or via direct confirmation from the customer

Subscription and Licensing

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

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

The Company’s Cloud Services business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based and include fax, voice, backup, security, CPP, and email marketing products where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following materially distinct performance obligations are satisfied: 

•Faxing capabilities are provided

•Voice services are provided

•Email marketing services are provided

•Consumer privacy services are provided

•Security solutions, including email and endpoint are provided

•Online data backup capabilities are provided

The Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period and believes that the method used is a faithful depiction of the transfer of goods and services.

Performance Obligations Satisfied at a Point in Time

    The Company’s Digital Media business has technology subscriptions that have standalone functionality. As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time. This is evidenced once a digital key is delivered to the customer. Once the key is delivered to the customer, the customer has full control of the technology and the Company has no further performance obligations. The Company has concluded that revenue is recognized once the digital key is delivered. The Company believes that this method is a faithful depiction of the transfer of goods and services.

Practical Expedients

Existence of a Significant Financing Component in a Contract

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

Costs to Fulfill a Contract

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

In addition, the Company partners with various affiliates in order to generate a portion of its revenue for certain lines of business. The commissions earned by the Company’s affiliates are incentive based and are paid on the acquisition of new customers in a given period. For those customers with amortization periods determined to be greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

Revenues Invoiced

The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.

Investments

Investments

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

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

The Company accounts for its investments in equity securities in accordance with ASC Topic No. 321, Investments - Equity Securities (“ASC 321”) which requires the accounting for equity investments (other than those accounted for using the equity method of accounting) generally be measured at fair value for equity securities with readily determinable fair values. For equity securities without a readily determinable fair value that are not accounted for by the equity method, the Company measures the equity security using cost, less impairment, if any, and plus or minus observable price changes arising from

orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported in current earnings (see Note 5 - Investments).

The Company assesses whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions (see Note 5 - Investments).

Variable Interest Entities (“VIE”)

Variable Interest Entities (“VIE”)

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

a) the Company has the power to direct the activities of the VIE that most significantly impacts the VIEs economic performance (the power criterion); and

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

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

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

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

Impairment or Disposal of Long-Lived Assets

Impairment or Disposal of Long-Lived Assets

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

The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of long-lived assets may not be recoverable. During the three and nine months ended September 30, 2021, the Company recorded an impairment of certain operating right-of-use assets (see Note 10 - Leases). In the third quarter of 2020, the Company recorded impairment of certain operating right-of-use assets and associated property and equipment. (see Note 10 - Leases).

The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being

actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale.

Business Combinations and Valuation of Goodwill and Intangible Assets

Business Combinations and Valuation of Goodwill and Intangible Assets

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

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from 1 to 20 years and are included in general and administrative expenses on the Condensed Consolidated Statements of Operations. The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic No. 350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested annually for impairment or more frequently if the Company believes indicators of impairment exist. In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then it performs the impairment test upon goodwill. The impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using the income approach methodology of valuation. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference. In the second quarter of 2021, the Company recorded an impairment to goodwill associated with the plan to sell the Company’s B2B Backup business. This sale closed during the third quarter of 2021 (see Note 6 – Dispositions). No impairment was recorded in the third quarter of 2020. In the first quarter of 2021, the Company changed the annual goodwill impairment assessment date for the Cloud Services business from September 30 to October 1, as it determined this date is preferable, and concluded this was not a material change in accounting principal.

Contingent Consideration

Contingent Consideration

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

The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the Condensed Consolidated Balance Sheets. The Company considers several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former shareholders of acquired companies that remain as key employees receive

compensation other than contingent earn-out payments at a reasonable level compared with the compensation of the Company’s other key employees. The contingent earn-out payments are not affected by employment termination.

The Company measures the contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 7 - Fair Value Measurements). The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses a probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and the amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in its Condensed Consolidated Statements of Cash Flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

The Company reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior quarterly amounts. Changes in the estimated fair value of its contingent earn-out liabilities are reported in general and administrative expenses on the Condensed Consolidated Statements of Operations.

Income Taxes

Income Taxes

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

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

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

In addition, on March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was enacted into law and provides for changes to various tax laws that impact businesses. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased

limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act also appropriated funds for the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19. The Company did not seek to borrow any funds under the program. However, as a result of an acquisition that closed during the quarter ended December 31, 2020, the Company assumed outstanding PPP loans that had started the process of being forgiven prior to the closing of the acquisition. During the second quarter of 2021, the Company received approval from the SBA to forgive the entire amount of the outstanding PPP Loan. The amount forgiven did not have a significant impact to the Company’s financial statements.

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

Share-Based Compensation

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

Reclassifications

Reclassifications

Certain prior year reported amounts have been reclassified to conform to the 2021 presentation.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company adopted this ASU in the first quarter of 2021 and has identified no material effect on its financial statements or disclosures.

In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investment - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The amendments in this ASU clarify certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method of accounting in Topic 323, and the accounting for certain forward contracts and purchased options under Topic 815. This ASU identifies two main areas for improvement: (1) accounting for certain equity securities upon the application or discontinuation of the equity method of accounting and (2) scope considerations for forward contracts and purchased options on certain securities. The amendment states, as it is related to the first area of improvement, that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendment also states, as it is relates to forward contracts and purchased options on certain securities, an entity should consider certain criteria to determine the accounting for those forward contracts and purchased options. The Company adopted this ASU in the first quarter of 2021 and has identified no effect on its financial statements or disclosures.

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

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

In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements. The amendments in this ASU improve the consistency of the codification and reorganize the guidance into appropriate sections providing less opportunities for disclosures to be missed. The amendments in this update do not change GAAP and are not expected to result in a significant change in practice. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020. The Company adopted this ASU in the first quarter of 2021 and has identified no effect on its financial statements or disclosures.

Fair Value Measurements

The Company complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

§	Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
§	Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
§	Level 3 – Unobservable inputs which are supported by little or no market activity.

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

The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices. The fair value of long-term debt is determined using recent quoted market prices or dealer quotes for each of the Company’s instruments, which are Level 1 inputs. The fair value of the Company’s debt instruments at September 30, 2021 and December 31, 2020 was $2.0 billion and $2.0 billion, respectively (see Note 9 - Debt).

Certain of the Company’s debt securities are classified within Level 2. The Company values these Level 2 investments based on model-driven valuations using significant inputs derived from or corroborated by observable market data.

The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. For similar reasons, certain of the Company’s available-for-sale debt securities are classified within Level 3. The valuation approaches used to value the Level 3 investments consider unobservable inputs in the market such as time to liquidity, volatility, dividend yield, and breakpoints. Significant increases or decreases in either of the inputs in isolation would result in a significantly lower or higher fair value measurement.

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Revenues (Tables)

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

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

	Three Months Ended September 30,				Nine Months Ended September 30,
Digital Media	2021		2020		2021		2020
Advertising (a)	$	198,794	$	138,441	$	574,465	$	380,188
Subscription and licensing (a)	52,010		44,423		145,935		121,028
Other (a)	11,625		3,920		22,880		12,246
Total Digital Media revenues	$	262,429	$	186,784	$	743,280	$	513,462
Cloud Services
Subscription and licensing	$	182,087	$	170,233	$	528,699	$	507,021
Other	92		15		267		69
Total Cloud Services revenues	$	182,179	$	170,248	$	528,966	$	507,090
Corporate	$	—	$	—	$	—	$	1
Elimination of inter-segment revenues	(356)		(56)		(766)		(200)
Total Revenues	$	444,252	$	356,976	$	1,271,480	$	1,020,353
Timing of revenue recognition
Point in time	$	13,606	$	8,396	$	30,669	$	19,366
Over time	430,646		348,580		1,240,811		1,000,987
Total	$	444,252	$	356,976	$	1,271,480	$	1,020,353

(a) The Company reclassified approximately $3.2 million and $8.8 million of revenue during the three and nine months ended September 30, 2020, respectively, from ‘Subscription and licensing’ to ‘Advertising’ and reclassified approximately $1.7 million and $6.7 million during the three and nine months ended September 30, 2020, respectively, from “Subscription and licensing’ to ‘Other’ to conform with current period presentation. These reclassifications were made in order to separate games publishing revenue from traditional advertising revenue.

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Business Acquisitions (Tables)

9 Months Ended

Sep. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Allocation of Aggregate Purchase Price

Assets and Liabilities	Valuation
Accounts receivable	$	5,167
Prepaid expenses and other current assets		1,639
Property and equipment		1,838
Operating lease right-of-use assets, noncurrent		5,888
Trade names		11,843
Customer relationship		11,521
Goodwill		85,552
Other intangibles		35,285
Deferred tax asset		230
Accounts payable and accrued expenses		(2,800)
Deferred revenue		(7,192)
Operating lease liabilities, current		(7,191)
Other current liabilities		(14)
Deferred tax liability		(4,936)
Other long-term liabilities		(1,726)
Total	$	135,104

Pro Forma Financial Information

The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its 2021 acquisitions as if each acquisition had occurred on January 1, 2020 (in thousands, except per share amounts):

	Nine Months Ended September 30,
	2021		2020
	(unaudited)		(unaudited)
Revenues	$	1,313,417	$	1,084,967
Net income	$	143,420	$	95,036
EPS - Basic	$	3.17	$	2.02
EPS - Diluted	$	3.01	$	1.99

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Investments (Tables)

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Summary of Securities without Readily Determinable Fair Value

The following table summarizes the gross unrealized gains and losses and estimated fair values for the Company’s securities without a readily determinable fair value (in thousands):

	Cost		Impairment		Adjustments		Reported Amount
September 30, 2021
Equity securities	$	31,777	$	(16,677)	$	(479)	$	14,621
Total	$	31,777	$	(16,677)	$	(479)	$	14,621
December 31, 2020
Equity securities	$	50,384	$	(19,605)	$	(479)	$	30,300
Total	$	50,384	$	(19,605)	$	(479)	$	30,300

Summary of Available-for-sale Investments

The following table summarizes the gross unrealized gains and losses and fair values for investments classified as available-for-sale investments (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2021
Corporate debt securities	$	—	$	—	$	—	$	—
Total	$	—	$	—	$	—	$	—
December 31, 2020
Corporate debt securities	$	511	$	152	$	—	$	663
Total	$	511	$	152	$	—	$	663

Available-for-Sale Securities Classified by Contractual Maturity Date

The following table summarizes the Company’s corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands):

	September 30, 2021		December 31, 2020
Due within 1 year	$	—	$	663
Due within more than 1 year but less than 5 years	—		—
Due within more than 5 years but less than 10 years	—		—
Due 10 years or after	—		—
Total	$	—	$	663

Carrying Amount for Equity Method Investment

The following table discloses the carrying amount for the Company’s equity method investment (in thousands):

	September 30, 2021		December 31, 2020
Equity method investment	$	96,097	$	67,195
Maximum exposure to loss	$	96,097	$	67,195

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurement Inputs and Valuation Techniques

The following table presents the fair values, valuation techniques, unobservable inputs, and ranges of the Company’s financial liabilities categorized within Level 3. The weighted averages below are a product of the unobservable input and fair value of the contingent consideration arrangement as of September 30, 2021.

	Valuation Technique	Unobservable Input	Range	Weighted Average
Contingent Consideration	Option-Based Model	Risk free rate	1.9% - 2.2%	2.0	%
		Debt spread	0.0% - 74.7%	13.6	%
		Probabilities	100.0%	100.0	%
		Present value factor	2.2% - 26.9%	15.4	%
		Discount rate	27.3% - 38.0%	32.3	%

Fair Values of Financial Instruments Measured On Recurring Basis

The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):

September 30, 2021	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	10,391	$	—	$	—	$	10,391	$	10,391
Corporate debt securities	—		—		—		—		—
Total assets measured at fair value	$	10,391	$	—	$	—	$	10,391	$	10,391
Liabilities:
Contingent consideration	$	—	$	—	$	9,296	$	9,296	$	9,296
Debt	1,975,779		—		—		1,975,779		1,678,753
Total liabilities measured at fair value	$	1,975,779	$	—	$	9,296	$	1,985,075	$	1,688,049
December 31, 2020	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	10,413	$	—	$	—	$	10,413	$	10,413
Corporate debt securities	—		663		—		663		663
Total assets measured at fair value	$	10,413	$	663	$	—	$	11,076	$	11,076
Liabilities:
Contingent consideration	$	—	$	—	$	9,094	$	9,094	$	9,094
Debt	1,960,527		—		—		1,960,527		1,579,021
Total liabilities measured at fair value	$	1,960,527	$	—	$	9,094	$	1,969,621	$	1,588,115

Reconciliation of Level 3 Financial Liabilities Measured on Recurring Basis

The following table presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands):

	Level 3		Affected line item in the Statement of Operations
Balance as of January 1, 2021	$	9,094
Contingent consideration	6,600
Total fair value adjustments reported in earnings	(567)		General and administrative
Contingent consideration payments	(5,831)		Not applicable
Balance as of September 30, 2021	$	9,296

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Amounts of Goodwill

The changes in carrying amounts of goodwill for the nine months ended September 30, 2021 are as follows (in thousands):

	Fax and Martech		Voice, Backup, Security and CPP		Total Cloud Services		Digital Media		Consolidated
Balance as of January 1, 2021	$	425,471	$	499,025	$	924,496	$	942,934	$	1,867,430
Goodwill acquired (Note 4)	41,152		—		41,152		44,400		85,552
Goodwill removed due to sale of businesses (1)	—		(50,276)		(50,276)		—		(50,276)
Goodwill impairment (2)	—		(32,629)		(32,629)		—		(32,629)
Purchase accounting adjustments (3)	—		505		505		(1,468)		(963)
Foreign exchange translation	(3,462)		(3,890)		(7,352)		(430)		(7,782)
Balance as of September 30, 2021	$	463,161	$	412,735	$	875,896	$	985,436	$	1,861,332

(1) On February 9, 2021, in a cash transaction, the Company sold certain of its Voice assets in the United Kingdom which resulted in $1.3 million of goodwill being removed in connection with this sale and on September 17, 2021, the Company sold certain of its B2B Backup assets which resulted in $49.0 million of goodwill being removed in connection with the sale (see Note 6 - Dispositions).

(2) During the nine months ended September 30, 2021, the Company had an impairment to goodwill of $32.6 million in connection with certain B2B Backup assets.

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

Intangible Assets with Indefinite Lives

Intangible assets are summarized as of September 30, 2021 and December 31, 2020 as follows (in thousands):

	September 30, 2021		December 31, 2020
Trade names	$	27,412	$	27,460
Other	4,317		4,329
Total	$	31,729	$	31,789

Intangible Assets Subject to Amortization

As of September 30, 2021, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	9.7 years	$	258,382	$	107,472	$	150,910
Patent and patent licenses	5.4 years	67,962		67,250		712
Customer relationships (1)	8.6 years	764,852		462,955		301,897
Other purchased intangibles	4.2 years	468,934		313,020		155,914
Total		$	1,560,130	$	950,697	$	609,433

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

As of December 31, 2020, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.0 years	$	260,715	$	100,273	$	160,442
Patent and patent licenses	5.5 years	67,980		66,964		1,016
Customer relationships (1)	8.0 years	848,875		471,681		377,194
Other purchased intangibles	4.3 years	436,352		265,224		171,128
Total		$	1,613,922	$	904,142	$	709,780

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

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Debt (Tables)

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Long-term Debt

The Company’s debt as of September 30, 2021 and December 31, 2020 consists of the following (in thousands):

	September 30, 2021		December 31, 2020
4.625% Senior Notes	$	750,000	$	750,000
Convertible Notes:
3.25% Convertible Notes	—		402,414
1.75% Convertible Notes	550,000		550,000
Total Notes	1,300,000		1,702,414
Paycheck Protection Program Loan	—		910
Bridge Loan	485,000		—
Less: Unamortized discount	(96,429)		(112,798)
Deferred issuance costs	(9,818)		(11,505)
Total debt	1,678,753		1,579,021
Less: current portion	(568,054)		(396,801)
Total long-term debt, less current portion	$	1,110,699	$	1,182,220

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Leases (Tables)

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Components of Lease Expense

The components of lease expense were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating lease cost	$	6,173	$	16,888	$	23,976	$	33,106
Short-term lease cost	712		264		2,653		1,357
Total lease cost	$	6,885	$	17,152	$	26,629	$	34,463

Balance Sheet and Other Supplemental Operating Lease Information

Supplemental balance sheet information related to leases was as follows (in thousands):

	September 30, 2021		December 31, 2020
Operating leases
Operating lease right-of-use assets	$	88,331	$	105,845
Total operating lease right-of-use assets	$	88,331	$	105,845
Operating lease liabilities, current	$	31,636	$	32,211
Operating lease liabilities, noncurrent	84,519		99,177
Total operating lease liabilities	$	116,155	$	131,388

Other supplemental operating lease information consists of the following:

	September 30, 2021		December 31, 2020
Operating leases:
Weighted average remaining lease term	5.1 years		5.2 years
Weighted average discount rate	3.83	%	3.93	%

Supplemental Cash Flow Information

Supplemental cash flow information related to leases was as follows (in thousands):

	Nine Months Ended September 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	21,869	$	21,764
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	9,274	$	7,968

Maturities of Operating Lease Liabilities

Maturities of operating lease liabilities as of September 30, 2021 were as follows (in thousands):

	Operating Leases
Fiscal Year:
2021 (remainder)	$	8,507
2022	31,926
2023	26,494
2024	18,840
2025	10,496
Thereafter	35,250
Total lease payments	$	131,513
Less: Imputed interest	15,358
Present value of operating lease liabilities	$	116,155

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Stock Options and Employee Stock Purchase Plan (Tables)

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock Option Activity

The following table represents stock option activity for the nine months ended September 30, 2021:

	Number of Shares	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021	475,601	$	69.61
Granted	—	—
Exercised	(68,601)	42.08
Canceled	—	—
Outstanding at September 30, 2021	407,000	$	74.25	6.2	$	25,385,630
Exercisable at September 30, 2021	157,000	$	73.00	6.0	$	9,988,130
Vested and expected to vest at September 30, 2021	346,640	$	74.11	6.1	$	21,668,058

Market-Based Restricted Stock Awards, Valuation Assumptions

The weighted-average fair values of market-based shares granted have been estimated utilizing the following assumptions:

	September 30, 2021			September 30, 2020
Underlying stock price at valuation date	$	113.27		$	91.17
Expected volatility	30.3		%	27.0		%
Risk-free interest rate	1.3		%	0.7		%

Restricted Stock and Restricted Stock Unit Award Activity

Restricted stock award activity for the nine months ended September 30, 2021 is set forth below:

	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2021	820,566	$	62.66
Granted	—	—
Vested	(421,923)	62.47
Canceled	(3,277)	82.96
Nonvested at September 30, 2021	395,366	$	61.62

Restricted stock unit award activity for the nine months ended September 30, 2021 is set forth below:

	Number of Shares	Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021	209,784
Granted	164,257
Vested	(124,761)
Canceled	(3,262)
Outstanding at September 30, 2021	246,018	3.2	$	33,610,979
Vested and expected to vest at September 30, 2021	170,143	2.5	$	23,244,890

Employee Stock Purchase Plan, Valuation Assumptions

The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions:

	September 30, 2021	September 30, 2020
Risk-free interest rate	0.06%	0.13%
Expected term (in years)	0.5	0.5
Dividend yield	0.00%	0.00%
Expected volatility	35.62%	23.95%
Weighted average volatility	35.62%	23.95%

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Components of Basic and Diluted Earnings Per Share

The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator for basic and diluted net income per common share:
Net income	$	42,569	$	60,883	$	136,209	$	92,580
Net income available to participating securities (a)	(28)		(89)		(143)		(477)
Net income available to the Company’s common shareholders	$	42,541	$	60,794	$	136,066	$	92,103
Denominator:
Weighted-average outstanding shares of common stock	46,738,073		46,279,515		45,258,819		46,914,750
Dilutive effect of:
Equity incentive plans	332,532		29,557		272,178		23,211
Convertible debt (b)	1,511,980		—		2,034,065		682,347
Common stock and common stock equivalents	48,582,585		46,309,072		47,565,062		47,620,308
Net income per share:
Basic	$	0.91	$	1.31	$	3.01	$	1.96
Diluted	$	0.88	$	1.31	$	2.86	$	1.93

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

(b)Represents the incremental shares issuable upon conversion of the 3.25% Convertible Notes due June 15, 2029 (subsequently redeemed in full) and 1.75% Convertible Notes due November 1, 2026 by applying the treasury stock method when the average stock price exceeds the conversion price of the Convertible Notes (see Note 9 - Debt).

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Reconciliation of Total Segment Operating Income to Consolidated Operating Income

Information on reportable segments and reconciliation to consolidated income from operations is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue by reportable segment:
Digital Media	$	262,429	$	186,784	$	743,280	$	513,462
Cloud Services
Fax and Martech	114,648		98,044		320,829		286,687
Voice, Backup, Security, and CPP	67,531		72,204		208,137		220,403
Cloud Services Total	182,179		170,248		528,966		507,090
Elimination of inter-segment revenues	(356)		(56)		(766)		(200)
Total segment revenues	444,252		356,976		1,271,480		1,020,352
Corporate (1)	—		—		—		1
Total revenues	$	444,252	$	356,976	$	1,271,480	$	1,020,353
Gross profit by reportable segment:
Digital Media	$	238,650	$	169,394	$	673,409	$	457,963
Cloud Services
Fax and Martech	91,993		81,435		261,742		238,149
Voice, Backup, Security, and CPP	49,395		50,392		151,155		152,733
Cloud Services Total	141,388		131,827		412,897		390,882
Elimination of inter-segment gross profit	(88)		(56)		(214)		(200)
Total segment gross profit	379,950		301,165		1,086,092		848,645
Corporate (1)	—		(11)		(74)		(47)
Total gross profit	$	379,950	$	301,154	$	1,086,018	$	848,598
Direct costs by reportable segment (2):
Digital Media (3)	$	188,950	$	143,312	$	548,960	$	410,109
Cloud Services
Fax and Martech (3)	42,057		28,614		107,109		89,121
Voice, Backup, Security, and CPP (3)	37,524		37,456		150,102		118,291
Cloud Services Total	79,581		66,070		257,211		207,412
Elimination of inter-segment direct costs	(88)		(56)		(214)		(200)
Total segment direct costs	268,443		209,326		805,957		617,321

Corporate (1)	15,366		14,390		43,785		25,552
Total direct costs (2)	$	283,809	$	223,716	$	849,742	$	642,873
Operating income by reportable segment:
Digital Media	$	49,700	$	26,082	$	124,449	$	47,854
Cloud Services
Fax and Martech	49,936		52,821		154,633		149,028
Voice, Backup, Security, and CPP	11,871		12,936		1,053		34,442
Cloud Services Total	61,807		65,757		155,686		183,470
Total segment operating income	111,507		91,839		280,135		231,324
Corporate (1)	(15,366)		(14,401)		(43,859)		(25,599)
Total income from operations	$	96,141	$	77,438	$	236,276	$	205,725
(1) Corporate includes costs associated with general and administrative and other expenses that are managed on a global basis and that are not directly attributable to any particular segment.
(2) Direct costs for each segment include other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expense, depreciation and amortization and other administrative expenses.
(3) Beginning in the third quarter of 2020, certain expenses associated with Corporate that were previously allocated to the Cloud Services business and the Digital Media business for shared costs incurred by Corporate were no longer allocated. Table above has been recast to remove the impact of certain expenses associated with Corporate that were previously allocated to the Cloud Services and Digital Media businesses.

Total Assets, Capital Expenditures, Depreciation and Amortization

The CODM does not use Balance Sheet and Cash Flow information in connection with operating and investment decisions other than as presented for Digital Media and Cloud Services. Accordingly, the following segment information is presented for Digital Media and Cloud Services.

	September 30, 2021		December 31, 2020
Assets:
Digital Media	$	1,978,252	$	2,088,397
Cloud Services	1,567,119		1,473,398
Total assets from Digital Media and Cloud Services	3,545,371		3,561,795
Corporate	285,286		103,536
Total assets	$	3,830,657	$	3,665,331
	Nine Months Ended September 30,
	2021		2020
Capital expenditures:
Digital Media	$	51,995	$	43,593
Cloud Services	35,500		27,673
Total capital expenditures from Digital Media and Cloud Services	87,495		71,266
Corporate	—		—
Total capital expenditures	$	87,495	$	71,266

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Depreciation and amortization:
Digital Media	$	50,056	$	36,651	$	147,482	$	101,771
Cloud Services	16,082		20,524		48,744		58,355
Total depreciation and amortization from Digital Media and Cloud Services	66,138		57,175		196,226		160,126
Corporate	79		2,437		217		3,554
Total depreciation and amortization	$	66,217	$	59,612	$	196,443	$	163,680

Revenues and Long-lived Assets by Geographic Information

The Company maintains operations in the U.S., Canada, Ireland, Japan and other countries. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on jurisdictions where revenues are reported (in thousands).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
United States	$	366,778	$	296,054	$	1,018,277	$	827,520
Canada	19,574		17,728		59,957		51,298
Ireland	13,980		14,947		59,227		40,520
All other countries	43,920		28,247		134,019		101,015
	$	444,252	$	356,976	$	1,271,480	$	1,020,353

	September 30, 2021		December 31, 2020
Long-lived assets:
United States	$	834,129	$	918,125
All other countries	46,815		54,073
Total	$	880,944	$	972,198

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Summary of Changes in Accumulated Balances in Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the three months ended September 30, 2021 (in thousands):

	Unrealized Gains (Losses) on Investments		Foreign Currency Translation		Total
Beginning balance	$	283	$	(60,257)	$	(59,974)
Other comprehensive income	(114)		(11,101)		(11,215)
Net current period other comprehensive income	(114)		(11,101)		(11,215)
Ending balance	$	169	$	(71,358)	$	(71,189)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the nine months ended September 30, 2021 (in thousands):

	Unrealized Gains (Losses) on Investments		Foreign Currency Translation		Total
Beginning balance	$	283	$	(55,089)	$	(54,806)
Other comprehensive loss	(114)		(16,269)		(16,383)
Net current period other comprehensive loss	(114)		(16,269)		(16,383)
Ending balance	$	169	$	(71,358)	$	(71,189)

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Basis of Presentation (Details)		9 Months Ended
	Oct. 07, 2021	Sep. 30, 2021
Subsequent Event
Finite-Lived Intangible Assets [Line Items]
Spinoff, percentage of stock distributed	80.10%
Shares received, as a ratio	0.3333
Consensus | Subsequent Event
Finite-Lived Intangible Assets [Line Items]
Ownership percentage	19.90%
Minimum
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life		1 year
Maximum
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life		20 years

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Revenues (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenue from Contract with Customer [Abstract]
Contract liability, revenue recognized	$ 31.8	$ 29.0	$ 161.2	$ 142.5
Deferred revenue acquired	$ 7.2		$ 7.2

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Revenues (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation of Revenue [Line Items]
Total revenues	$ 444,252	$ 356,976	$ 1,271,480	$ 1,020,353
Point in time
Disaggregation of Revenue [Line Items]
Total revenues	13,606	8,396	30,669	19,366
Over time
Disaggregation of Revenue [Line Items]
Total revenues	430,646	348,580	1,240,811	1,000,987
Advertising | Revision of Prior Period, Reclassification, Adjustment | Revenue Correction, Subscription And Licensing To Advertising
Disaggregation of Revenue [Line Items]
Total revenues		3,200		8,800
Subscription and licensing | Revision of Prior Period, Reclassification, Adjustment | Revenue Correction, Subscription And Licensing To Advertising
Disaggregation of Revenue [Line Items]
Total revenues		(3,200)		(8,800)
Subscription and licensing | Revision of Prior Period, Reclassification, Adjustment | Revenue Correction, Subscription And Licensing To Other
Disaggregation of Revenue [Line Items]
Total revenues		(1,700)		(6,700)
Other | Revision of Prior Period, Reclassification, Adjustment | Revenue Correction, Subscription And Licensing To Other
Disaggregation of Revenue [Line Items]
Total revenues		1,700		6,700
Operating Segments
Disaggregation of Revenue [Line Items]
Total revenues	444,252	356,976	1,271,480	1,020,352
Operating Segments | Digital Media
Disaggregation of Revenue [Line Items]
Total revenues	262,429	186,784	743,280	513,462
Operating Segments | Digital Media | Advertising
Disaggregation of Revenue [Line Items]
Total revenues	198,794	138,441	574,465	380,188
Operating Segments | Digital Media | Subscription and licensing
Disaggregation of Revenue [Line Items]
Total revenues	52,010	44,423	145,935	121,028
Operating Segments | Digital Media | Other
Disaggregation of Revenue [Line Items]
Total revenues	11,625	3,920	22,880	12,246
Operating Segments | Cloud Services
Disaggregation of Revenue [Line Items]
Total revenues	182,179	170,248	528,966	507,090
Operating Segments | Cloud Services | Subscription and licensing
Disaggregation of Revenue [Line Items]
Total revenues	182,087	170,233	528,699	507,021
Operating Segments | Cloud Services | Other
Disaggregation of Revenue [Line Items]
Total revenues	92	15	267	69
Corporate
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	1
Elimination of inter-segment
Disaggregation of Revenue [Line Items]
Total revenues	$ (356)	$ (56)	$ (766)	$ (200)

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Business Acquisitions (Narrative) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)
Business Acquisition [Line Items]
Increase (decrease) in goodwill from adjustment under purchase accounting	$ (963)
Goodwill acquired during period	85,552
Digital Media
Business Acquisition [Line Items]
Increase (decrease) in goodwill from adjustment under purchase accounting	(1,500)
Digital Media | Operating Segments
Business Acquisition [Line Items]
Increase (decrease) in goodwill from adjustment under purchase accounting	(1,468)
Goodwill acquired during period	44,400
Voice, Backup, Security and CPP
Business Acquisition [Line Items]
Increase (decrease) in goodwill from adjustment under purchase accounting	500
Voice, Backup, Security and CPP | Operating Segments
Business Acquisition [Line Items]
Increase (decrease) in goodwill from adjustment under purchase accounting	505
Goodwill acquired during period	0
Fiscal 2021 Acquisitions
Business Acquisition [Line Items]
Revenue of acquiree since acquisition date	21,300
Total consideration of transactions	135,100
Goodwill acquired during period	85,600
Expected income tax deductible amount	$ 44,100

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Business Acquisitions (Allocation of Aggregate Purchase Price) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Business Acquisition [Line Items]
Goodwill	$ 1,861,332	$ 1,867,430
Deferred revenue	(7,200)
Fiscal 2021 Acquisitions
Business Acquisition [Line Items]
Accounts receivable	5,167
Prepaid expenses and other current assets	1,639
Property and equipment	1,838
Operating lease right-of-use assets, noncurrent	5,888
Goodwill	85,552
Deferred tax asset	230
Accounts payable and accrued expenses	(2,800)
Deferred revenue	(7,192)
Operating lease liabilities, current	(7,191)
Other current liabilities	(14)
Deferred tax liability	(4,936)
Other long-term liabilities	(1,726)
Total	135,104
Fiscal 2021 Acquisitions | Trade names
Business Acquisition [Line Items]
Finite-lived intangible assets	11,843
Fiscal 2021 Acquisitions | Customer relationship
Business Acquisition [Line Items]
Finite-lived intangible assets	11,521
Fiscal 2021 Acquisitions | Other intangibles
Business Acquisition [Line Items]
Finite-lived intangible assets	$ 35,285

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Business Acquisitions (Pro Forma Financial Information) (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Business Combination and Asset Acquisition [Abstract]
Revenues	$ 1,313,417	$ 1,084,967
Net income	$ 143,420	$ 95,036
EPS - Basic (usd per share)	$ 3.17	$ 2.02
EPS - Diluted (usd per share)	$ 3.01	$ 1.99

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Investments (Summary of Securities without Readily Determinable Fair Value) (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Cost	$ 31,777		$ 50,384
Impairment	(16,677)	$ (19,600)	(19,605)
Adjustments	(479)		(479)
Reported Amount	$ 14,621		$ 30,300

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Investments (Narrative) (Details) $ in Thousands		3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 25, 2017 USD ($)	Sep. 30, 2021 USD ($)	Jun. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($) investment
Unusual or Infrequent Item, or Both [Line Items]
Loss on investments, net		$ 0	$ 16,700	$ 156	$ 16,677	$ 20,991	$ 3,800
Impairment loss on equity securities without readily determinable fair value					16,677	19,600	$ 19,605
Recognized loss on exchange of available-for-sale debt securities						4,400
Gain on purchase of preferred stock						3,200
Purchase of preferred stock						800
Cumulative impairment losses		40,500			$ 40,500
Variable interest entity, amount committed to invest	$ 200,000
Variable interest entity, ownership percentage	76.60%
Annual management fee percentage	2.00%
Management fee annual reduction percentage	10.00%
Entitled carried interest percentage	20.00%
Investment period					6 years
Variable interest entity, amount of capital call notices received					$ 21,200	31,000
Variable interest entity, amount paid					21,200	30,000
Variable interest entity, distribution received		15,300			15,300
Income (loss) from equity method investment		(1,923)		(709)	16,596	(10,799)
Management fees recognized		$ 800		$ 800	$ 2,300	$ 2,300
COVID-19
Unusual or Infrequent Item, or Both [Line Items]
Number of investments impaired | investment							2
Equity method investment, impairment							$ 7,000

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Investments (Summary of Available-for-sale Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 0	$ 511
Gross Unrealized Gains	0	152
Gross Unrealized Losses	0	0
Fair Value	0	663
Corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	0	511
Gross Unrealized Gains	0	152
Gross Unrealized Losses	0	0
Fair Value	$ 0	$ 663

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Investments (Available-for-Sale Securities Classified by Contractual Maturity Date) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Due within 1 year	$ 0	$ 663
Due within more than 1 year but less than 5 years	0	0
Due within more than 5 years but less than 10 years	0	0
Due 10 years or after	0	0
Total	$ 0	$ 663

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Investments (Carrying Amount for Equity Method Investment) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Equity method investment	$ 96,097	$ 67,195
Maximum exposure to loss	$ 96,097	$ 67,195

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Dispositions - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
(Loss) gain on sale of businesses	$ (24,600)	$ 17,122	$ (21,798)	$ 17,122
Goodwill impairment on business	$ 0	$ 0	32,629	$ 0
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Voice Assets
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
(Loss) gain on sale of businesses			2,800
Disposal Group, Disposed of by Sale, Not Discontinued Operations | B2B Backup Business
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
(Loss) gain on sale of businesses			24,600
Goodwill impairment on business			$ 32,600

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of debt instruments	$ 2,000,000		$ 2,000,000
Changes in fair value of contingent consideration	(567)	$ (243)
Other Business Acquisitions
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Maximum of contingent consideration may be payable	14,900
Fair value of contingent consideration	9,300		$ 9,100
Contingent consideration paid	5,800
Changes in fair value of contingent consideration	$ (600)

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Fair Value Measurements (Fair Value Measurement Inputs and Valuation Techniques) (Details) - Option-Based Model	Sep. 30, 2021
Risk free rate | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.019
Risk free rate | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.022
Risk free rate | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.020
Debt spread | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.000
Debt spread | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.747
Debt spread | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.136
Probabilities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	1.000
Probabilities | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	1.000
Present value factor | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.022
Present value factor | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.269
Present value factor | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.154
Discount rate | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.273
Discount rate | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.380
Discount rate | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent Consideration	0.323

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Fair Value Measurements (Fair Values of Financial Instruments Measured On Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 2,000,000	$ 2,000,000
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total assets measured at fair value	10,391	11,076
Contingent consideration	9,296	9,094
Debt	1,975,779	1,960,527
Total liabilities measured at fair value	1,985,075	1,969,621
Fair Value | Money market and other funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market and other funds	10,391	10,413
Fair Value | Corporate debt securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Corporate debt securities	0	663
Fair Value | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total assets measured at fair value	10,391	10,413
Contingent consideration	0	0
Debt	1,975,779	1,960,527
Total liabilities measured at fair value	1,975,779	1,960,527
Fair Value | Level 1 | Money market and other funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market and other funds	10,391	10,413
Fair Value | Level 1 | Corporate debt securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Corporate debt securities	0	0
Fair Value | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total assets measured at fair value	0	663
Contingent consideration	0	0
Debt	0	0
Total liabilities measured at fair value	0	0
Fair Value | Level 2 | Money market and other funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market and other funds	0	0
Fair Value | Level 2 | Corporate debt securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Corporate debt securities	0	663
Fair Value | Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total assets measured at fair value	0	0
Contingent consideration	9,296	9,094
Debt	0	0
Total liabilities measured at fair value	9,296	9,094
Fair Value | Level 3 | Money market and other funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market and other funds	0	0
Fair Value | Level 3 | Corporate debt securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Corporate debt securities	0	0
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total assets measured at fair value	10,391	11,076
Contingent consideration	9,296	9,094
Debt	1,678,753	1,579,021
Total liabilities measured at fair value	1,688,049	1,588,115
Carrying Value | Money market and other funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market and other funds	10,391	10,413
Carrying Value | Corporate debt securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Corporate debt securities	$ 0	$ 663

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Fair Value Measurements (Reconciliation of Level 3 Financial Liabilities Measured on Recurring Basis) (Details) - Level 3 $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance as of January 1, 2021	$ 9,094
Contingent consideration	6,600
Total fair value adjustments reported in earnings	(567)
Contingent consideration payments	(5,831)
Balance as of September 30, 2021	$ 9,296

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Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 47.8	$ 41.2	$ 144.3	$ 115.6
Estimated future amortization for the remainder of fiscal year	43.8		43.8
Estimated future amortization expense in year one	143.5		143.5
Estimated future amortization expense in year two	123.2		123.2
Estimated future amortization expense in year three	80.2		80.2
Estimated future amortization expense in year four	75.1		75.1
Estimated future amortization expense thereafter	$ 143.6		$ 143.6
Minimum
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life			1 year
Maximum
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life			20 years

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Goodwill and Intangible Assets (Changes in Carrying Amounts of Goodwill) (Details) - USD ($) $ in Thousands			3 Months Ended		9 Months Ended
	Sep. 17, 2021	Feb. 09, 2021	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Goodwill [Roll Forward]
Balance as of January 1, 2021					$ 1,867,430
Goodwill acquired (Note 4)					85,552
Goodwill removed due to sale of businesses					(50,276)
Goodwill impairment			$ 0	$ 0	(32,629)	$ 0
Purchase accounting adjustments					(963)
Foreign exchange translation					(7,782)
Balance as of September 30, 2021			1,861,332		1,861,332
Disposal Group, Disposed of by Sale, Not Discontinued Operations | B2B Backup Business
Goodwill [Roll Forward]
Goodwill removed due to sale of businesses	$ (49,000)
Goodwill impairment					(32,600)
Voice, Backup, Security and CPP
Goodwill [Roll Forward]
Goodwill removed due to sale of businesses		$ (1,300)
Purchase accounting adjustments					500
Digital Media
Goodwill [Roll Forward]
Purchase accounting adjustments					(1,500)
Operating Segments | Total Cloud Services
Goodwill [Roll Forward]
Balance as of January 1, 2021					924,496
Goodwill acquired (Note 4)					41,152
Goodwill removed due to sale of businesses					(50,276)
Goodwill impairment					(32,629)
Purchase accounting adjustments					505
Foreign exchange translation					(7,352)
Balance as of September 30, 2021			875,896		875,896
Operating Segments | Fax and Martech
Goodwill [Roll Forward]
Balance as of January 1, 2021					425,471
Goodwill acquired (Note 4)					41,152
Goodwill removed due to sale of businesses					0
Goodwill impairment					0
Purchase accounting adjustments					0
Foreign exchange translation					(3,462)
Balance as of September 30, 2021			463,161		463,161
Operating Segments | Voice, Backup, Security and CPP
Goodwill [Roll Forward]
Balance as of January 1, 2021					499,025
Goodwill acquired (Note 4)					0
Goodwill removed due to sale of businesses					(50,276)
Goodwill impairment					(32,629)
Purchase accounting adjustments					505
Foreign exchange translation					(3,890)
Balance as of September 30, 2021			412,735		412,735
Operating Segments | Digital Media
Goodwill [Roll Forward]
Balance as of January 1, 2021					942,934
Goodwill acquired (Note 4)					44,400
Goodwill removed due to sale of businesses					0
Goodwill impairment					0
Purchase accounting adjustments					(1,468)
Foreign exchange translation					(430)
Balance as of September 30, 2021			$ 985,436		$ 985,436

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Goodwill and Intangible Assets (Intangible Assets with Indefinite Lives) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Indefinite-lived Intangible Assets [Line Items]
Intangible assets	$ 31,729	$ 31,789
Trade names
Indefinite-lived Intangible Assets [Line Items]
Intangible assets	27,412	27,460
Other
Indefinite-lived Intangible Assets [Line Items]
Intangible assets	$ 4,317	$ 4,329

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Goodwill and Intangible Assets (Intangible Assets Subject to Amortization) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Historical Cost	$ 1,560,130	$ 1,613,922
Accumulated Amortization	950,697	904,142
Net	$ 609,433	$ 709,780
Minimum
Finite-Lived Intangible Assets [Line Items]
Weighted-Average   Amortization Period	1 year
Maximum
Finite-Lived Intangible Assets [Line Items]
Weighted-Average   Amortization Period	20 years
Trade names
Finite-Lived Intangible Assets [Line Items]
Weighted-Average   Amortization Period	9 years 8 months 12 days	10 years
Historical Cost	$ 258,382	$ 260,715
Accumulated Amortization	107,472	100,273
Net	$ 150,910	$ 160,442
Patent and patent licenses
Finite-Lived Intangible Assets [Line Items]
Weighted-Average   Amortization Period	5 years 4 months 24 days	5 years 6 months
Historical Cost	$ 67,962	$ 67,980
Accumulated Amortization	67,250	66,964
Net	$ 712	$ 1,016
Customer relationship
Finite-Lived Intangible Assets [Line Items]
Weighted-Average   Amortization Period	8 years 7 months 6 days	8 years
Historical Cost	$ 764,852	$ 848,875
Accumulated Amortization	462,955	471,681
Net	$ 301,897	$ 377,194
Customer relationship | Minimum
Finite-Lived Intangible Assets [Line Items]
Weighted-Average   Amortization Period	4 years	4 years
Customer relationship | Maximum
Finite-Lived Intangible Assets [Line Items]
Weighted-Average   Amortization Period	5 years	5 years
Other purchased intangibles
Finite-Lived Intangible Assets [Line Items]
Weighted-Average   Amortization Period	4 years 2 months 12 days	4 years 3 months 18 days
Historical Cost	$ 468,934	$ 436,352
Accumulated Amortization	313,020	265,224
Net	$ 155,914	$ 171,128

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Debt (Long-term Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020	Oct. 07, 2020	Nov. 15, 2019	Jun. 10, 2014
Debt Instrument [Line Items]
Less: Unamortized discount	$ (96,429)	$ (112,798)
Deferred issuance costs	(9,818)	(11,505)
Total debt	1,678,753	1,579,021
Less: current portion	(568,054)	(396,801)
Total long-term debt, less current portion	1,110,699	1,182,220
Senior Notes | 4.625% Senior Notes
Debt Instrument [Line Items]
Stated interest rate			4.625%
Total Notes	750,000	750,000
Convertible Debt
Debt Instrument [Line Items]
Total Notes	1,300,000	1,702,414
Convertible Debt | 3.25% Convertible Notes
Debt Instrument [Line Items]
Stated interest rate					3.25%
Total Notes	0	402,414
Convertible Debt | 1.75% Convertible Notes
Debt Instrument [Line Items]
Stated interest rate				1.75%
Total Notes	550,000	550,000
Deferred issuance costs				$ (2,800)
Loans Payable | Paycheck Protection Program, CARES Act
Debt Instrument [Line Items]
Total Notes	0	910
Loans Payable | Bridge Loan
Debt Instrument [Line Items]
Total Notes	$ 485,000	$ 0

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Debt (Narrative) (Details)						3 Months Ended	9 Months Ended
	Sep. 24, 2021 USD ($)	Sep. 16, 2021 USD ($) extension	Oct. 07, 2020 USD ($) fiscalQuarterPeriod	Nov. 15, 2019 USD ($) tradingDay	Jun. 10, 2014 USD ($)	Sep. 30, 2021 USD ($) $ / shares shares	Sep. 30, 2021 USD ($) $ / shares shares	Sep. 30, 2020 USD ($)	Apr. 07, 2021 USD ($)	Dec. 31, 2020 USD ($)
Debt Instrument [Line Items]
Fair value of debt instruments						$ 2,000,000,000	$ 2,000,000,000			$ 2,000,000,000
Repayments of long-term debt							402,414,000	$ 0
Deferred issuance costs						$ 9,818,000	9,818,000			11,505,000
Proceeds from bridge loan							$ 485,000,000	$ 0
Common stock
Debt Instrument [Line Items]
Exercise of 3.25% Convertible Note (in shares) | shares						3,031,817	3,050,850
Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity									$ 100,000,000
Increase available									250,000,000
Total aggregate commitment									$ 350,000,000
Bridge Loan Facility | Bridge Loan
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity		$ 485,000,000
Term		364 days
Number of extensions | extension		2
Extension period		3 months
Proceeds from bridge loan							$ 485,000,000
Bridge loan fair value disclosure						$ 485,000,000	485,000,000
Funding fee percentage		0.50%
Duration fee percentage		0.25%
Anniversary fee percentage		0.50%
Bridge Loan Facility | Bridge Loan | Base Rate | Initial Funding
Debt Instrument [Line Items]
Basis spread on variable rate		2.00%
Bridge Loan Facility | Bridge Loan | Base Rate | Six To Twelve Months After Funding
Debt Instrument [Line Items]
Basis spread on variable rate		2.50%
Bridge Loan Facility | Bridge Loan | Base Rate | Twelve Months After Funding Until Repayment
Debt Instrument [Line Items]
Basis spread on variable rate		3.00%
Bridge Loan Facility | Bridge Loan | LIBOR | Initial Funding
Debt Instrument [Line Items]
Basis spread on variable rate		3.00%
Bridge Loan Facility | Bridge Loan | LIBOR | Six To Twelve Months After Funding
Debt Instrument [Line Items]
Basis spread on variable rate		3.50%
Bridge Loan Facility | Bridge Loan | LIBOR | Twelve Months After Funding Until Repayment
Debt Instrument [Line Items]
Basis spread on variable rate		4.00%
Senior Notes | 4.625% Senior Notes
Debt Instrument [Line Items]
Stated interest rate			4.625%
Face amount			$ 750,000,000
Proceeds from debt, net of issuance costs			$ 742,700,000
Percentage principal outstanding to be eligible for redemption			50.00%
Covenant, leverage ratio, minimum			3.5
Covenant restricted payment threshold			$ 250,000,000
Covenant, EBITDA minimum			50.00%
Covenant, EBITDA minimum, fiscal quarter period | fiscalQuarterPeriod			4
Cash tender offer (maximum)	$ 90,000,000
Principal amount						83,300,000	83,300,000
Fair value of debt instruments						797,900,000	797,900,000			796,900,000
Outstanding debt originating from the Paycheck Protection Program						750,000,000	750,000,000			750,000,000
Senior Notes | 4.625% Senior Notes | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Percentage of principal amount redeemed			40.00%
Redemption price, percentage			104.625%
Senior Notes | 4.625% Senior Notes | Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Redemption price, percentage			100.00%
Senior Notes | 6.0% Senior Notes
Debt Instrument [Line Items]
Stated interest rate			6.00%
Convertible Debt
Debt Instrument [Line Items]
Outstanding debt originating from the Paycheck Protection Program						1,300,000,000	1,300,000,000			1,702,414,000
Convertible Debt | 3.25% Convertible Notes
Debt Instrument [Line Items]
Stated interest rate					3.25%
Face amount					$ 402,500,000
Fair value of debt instruments						0	0			593,100,000
Contingent interest period					6 months
Trading period					5 days
Contingent interest, minimum trading price per principal amount					$ 1,300
Repayments of long-term debt						$ 399,600,000	$ 402,400,000
Exercise of 3.25% Convertible Note (in shares) | shares						3,031,817	3,050,850
Outstanding debt originating from the Paycheck Protection Program						$ 0	$ 0			402,414,000
Convertible Debt | 1.75% Convertible Notes
Debt Instrument [Line Items]
Stated interest rate				1.75%
Face amount				$ 550,000,000
Proceeds from debt, net of issuance costs				$ 537,100,000
Fair value of debt instruments						$ 692,900,000	$ 692,900,000			569,700,000
Convertible debt conversion ratio							0.0079864
Convertible debt conversion price (in usd per share) | $ / shares						$ 125.21	$ 125.21
Borrowing rates of similar debt without the conversion feature				5.50%
Unamortized discount				$ 118,900,000
Convertible debt carrying amount of equity component				88,100,000
Deferred issuance costs				$ 2,800,000
Effective interest rate				5.50%
Convertible debt remaining discount amortization period							5 years 1 month 6 days
Gross debt issuance costs				$ 12,900,000
Accumulated amortization of debt issuance costs				$ 10,100,000
Unamortized debt issuance expense						$ 8,000,000	$ 8,000,000
Outstanding debt originating from the Paycheck Protection Program						550,000,000	550,000,000			550,000,000
Convertible Debt | 1.75% Convertible Notes | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Convertible debt threshold trading days | tradingDay				20
Convertible debt threshold consecutive trading days | tradingDay				30
Percentage of stock price				130.00%
Convertible Debt | 1.75% Convertible Notes | Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Convertible debt threshold trading days | tradingDay				5
Convertible debt threshold consecutive trading days | tradingDay				10
Percentage of product of stock price and conversion rate				98.00%
Loans Payable | Paycheck Protection Program, CARES Act
Debt Instrument [Line Items]
Outstanding debt originating from the Paycheck Protection Program						$ 0	$ 0			$ 910,000

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Leases (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Lessee, Lease, Description [Line Items]
Operating lease renewal term	5 years		5 years
Lease asset impairments		$ 9,800	$ 9,410	$ 9,786
Property and equipment impairment		3,600
Sublease income	$ 500	$ 400	1,400	$ 2,200
Estimated aggregate sublease income to be received in the future	$ 5,200		5,200
COVID-19
Lessee, Lease, Description [Line Items]
Lease asset impairments			$ 2,100
Minimum
Lessee, Lease, Description [Line Items]
Operating lease terms	3 years		3 years
Maximum
Lessee, Lease, Description [Line Items]
Operating lease terms	5 years		5 years

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Leases (Components of Lease Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Leases [Abstract]
Operating lease cost	$ 6,173	$ 16,888	$ 23,976	$ 33,106
Short-term lease cost	712	264	2,653	1,357
Total lease cost	$ 6,885	$ 17,152	$ 26,629	$ 34,463

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Leases (Balance Sheet and Other Supplemental Operating Lease Information) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease right-of-use assets	$ 88,331	$ 105,845
Operating lease liabilities, current	31,636	32,211
Operating lease liabilities, noncurrent	84,519	99,177
Present value of operating lease liabilities	$ 116,155	$ 131,388
Weighted average remaining lease term	5 years 1 month 6 days	5 years 2 months 12 days
Weighted average discount rate	3.83%	3.93%

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Leases (Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Leases [Abstract]
Operating cash flows from operating leases	$ 21,869	$ 21,764
Right-of-use assets obtained in exchange for operating lease obligations	$ 9,274	$ 7,968

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Leases (Maturities of Operating Lease Liabilities) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Leases [Abstract]
2021 (remainder)	$ 8,507
2022	31,926
2023	26,494
2024	18,840
2025	10,496
Thereafter	35,250
Total lease payments	131,513
Less: Imputed interest	15,358
Present value of operating lease liabilities	$ 116,155	$ 131,388

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Commitments and Contingencies (Details) $ in Millions	Sep. 30, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Loss contingencies accrued	$ 24.4

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020	Jun. 10, 2014
Valuation Allowance [Line Items]
Effective income tax rate	16.60%	28.30%	12.30%	32.20%
Income before income taxes, domestic operations			$ 29.2	$ 32.2
Income before income taxes, foreign operations			107.1	120.2
Liabilities for uncertain income tax positions	$ 54.2		54.2		$ 57.1
Cash paid for income taxes			51.8	$ 33.5
Prepaid tax payments	12.6		12.6		$ 3.0
Decrease in deferred tax liability	44.2		44.2
Increase in additional paid-in capital	$ 44.2		$ 44.2
3.25% Convertible Notes | Convertible Debt
Valuation Allowance [Line Items]
Stated interest rate						3.25%

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Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	9 Months Ended	12 Months Ended			14 Months Ended	26 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Sep. 30, 2021	Dec. 31, 2020	Aug. 06, 2020	Jun. 10, 2014	Feb. 29, 2012
Class of Stock [Line Items]
Number of shares purchased from plan participants (in shares)	49,641
Dividend per common share (in usd per share)		$ 0	$ 0
Common stock
Class of Stock [Line Items]
Exercise of 3.25% Convertible Note (in shares)	3,031,817	3,050,850
3.25% Convertible Notes | Convertible Debt
Class of Stock [Line Items]
Stated interest rate									3.25%
Exercise of 3.25% Convertible Note (in shares)	3,031,817	3,050,850
2012 Repurchase Program
Class of Stock [Line Items]
Maximum number of shares authorized to be repurchased (in shares)										5,000,000
Shares repurchased under the program (in shares)			1,140,819	197,870	600,000
Aggregate cost of shares repurchased			$ 87.5	$ 16.0	$ 42.5		$ 204.6
2020 Repurchase Program
Class of Stock [Line Items]
Maximum number of shares authorized to be repurchased (in shares)								10,000,000,000,000
Shares repurchased under the program (in shares)		0				2,490,599
Aggregate cost of shares repurchased						$ 177.8

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Stock Options and Employee Stock Purchase Plan (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (in shares)	407,000		407,000		475,601
Total intrinsic values of options exercised in period			$ 5,600	$ 3,000
Compensation cost recognized	$ 6,755	$ 5,800	$ 19,119	$ 18,643
Estimated forfeiture rates			12.40%	11.80%
Cash received upon the issuance of common stock			$ 4,232	$ 3,303
Share-based Payment Arrangement, Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost recognized	200	200	600	700
Unrecognized compensation cost related to non-vested awards granted	5,100		$ 5,100		$ 5,800
Weighted-average period to recognize compensation cost (in years)			4 years 3 months 18 days
Restricted Stock And Restricted Stock Unit (RSU)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost recognized	5,700	5,100	$ 16,400	$ 16,400
Unrecognized compensation cost related to non-vested awards granted	$ 37,300		$ 37,300		$ 38,600
Restricted Stock And Restricted Stock Unit (RSU) | Board of Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting periods			1 year
Restricted Stock And Restricted Stock Unit (RSU) | Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting periods			8 years
Restricted (Performance) Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			73,094	82,112
Granted (in usd per share)			$ 94.40	$ 70.99
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stocks outstanding (in shares)	395,366		395,366		820,566
Weighted-average period to recognize compensation cost (in years)			3 years 7 months 6 days
Granted (in shares)			0
Granted (in usd per share)			$ 0
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average period to recognize compensation cost (in years)			4 years 1 month 6 days
Granted (in shares)			164,257
Minimum | Restricted Stock And Restricted Stock Unit (RSU) | Senior Staff
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting periods			4 years
Maximum | Restricted Stock And Restricted Stock Unit (RSU) | Senior Staff
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting periods			5 years
2007 Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum issuance of common stock (in shares)	4,500,000		4,500,000
Purchase price of common stock, percent			85.00%
Number of options outstanding (in shares)	7,000		7,000
Number of stocks outstanding (in shares)	0		0
2015 Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum issuance of common stock (in shares)	4,200,000		4,200,000
Number of options outstanding (in shares)	400,000		400,000
Number of stocks outstanding (in shares)	246,018		246,018
2015 Stock Option Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Market value of common stock on the date of grant for incentive stock options			100.00%
Employee Stock Purchase Plan | Common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum issuance of common stock (in shares)	2,000,000,000,000		2,000,000,000,000
Market value of common stock on the date of grant for incentive stock options			85.00%
Compensation cost recognized	$ 800	$ 500	$ 2,100	$ 1,500
Estimated forfeiture rates			11.15%	16.50%
Maximum earnings withheld by the employees	15.00%		15.00%
Issuance of shares under employee stock purchase plan (in shares)			58,145	53,694
Cash received upon the issuance of common stock			$ 4,200	$ 3,300
Number of shares available for issuance (in shares)	1,346,794		1,346,794

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Stock Options and Employee Stock Purchase Plan (Stock Option Activity) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2021
Number of Shares
Outstanding at beginning of period (in shares)	475,601
Granted (in shares)	0
Exercised (in shares)	(68,601)
Canceled (in shares)	0
Outstanding at end of period (in shares)	407,000
Exercisable at end of period (in shares)	157,000
Vested and expected to vest at end of period (in shares)	346,640
Weighted- Average Exercise Price
Outstanding at beginning of period (in usd per share)	$ 69.61
Granted (in usd per share)	0
Exercised (in usd per share)	42.08
Canceled (in usd per share)	0
Outstanding at end of period (in usd per share)	74.25
Exercisable at end of period (in usd per share)	73.00
Vested and expected to vest at end of period (in usd per share)	$ 74.11
Weighted-Average Remaining Contractual Term (in years)
Outstanding at end of period	6 years 2 months 12 days
Exercisable at end of period	6 years
Vested and expected to vest at end of period	6 years 1 month 6 days
Aggregate Intrinsic Value
Outstanding at end of period	$ 25,385,630
Exercisable at end of period	9,988,130
Vested and expected to vest at end of period	$ 21,668,058

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Stock Options and Employee Stock Purchase Plan (Market-Based Restricted Stock Awards, Valuation Assumptions) (Details) - Restricted (Performance) Stock - $ / shares	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Underlying stock price at valuation date (in usd per share)	$ 113.27	$ 91.17
Expected volatility	30.30%	27.00%
Risk-free interest rate	1.30%	0.70%

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Stock Options and Employee Stock Purchase Plan (Restricted Stock and Restricted Stock Unit Award Activity) (Details)	9 Months Ended
	Sep. 30, 2021 USD ($) $ / shares shares
Restricted Stock
Number of Shares
Nonvested at beginning of period (in shares)	820,566
Granted (in shares)	0
Vested (in shares)	(421,923)
Canceled (in shares)	(3,277)
Nonvested at end of period (in shares)	395,366
Number of Shares
Granted (in shares)	0
Vested (in shares)	(421,923)
Canceled (in shares)	(3,277)
Weighted-Average Grant-Date Fair Value
Nonvested at beginning of period (in usd per share) | $ / shares	$ 62.66
Granted (in usd per share) | $ / shares	0
Vested (in usd per share) | $ / shares	62.47
Canceled (in usd per share) | $ / shares	82.96
Nonvested at end of period (in usd per share) | $ / shares	$ 61.62
Restricted Stock Units
Number of Shares
Granted (in shares)	164,257
Vested (in shares)	(124,761)
Canceled (in shares)	(3,262)
Number of Shares
Outstanding at beginning of period (in shares)	209,784
Granted (in shares)	164,257
Vested (in shares)	(124,761)
Canceled (in shares)	(3,262)
Outstanding at end of period (in shares)	246,018
Vested and expected to vest at end of period (in shares)	170,143
Weighted-Average Remaining Contractual Term (in years)
Outstanding at end of period	3 years 2 months 12 days
Vested and expected to vest at end of period	2 years 6 months
Aggregate Intrinsic Value
Outstanding at end of period | $	$ 33,610,979
Vested and expected to vest at end of period | $	$ 23,244,890

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Stock Options and Employee Stock Purchase Plan (Employee Stock Purchase Plan, Valuation Assumptions) (Details) - Common stock - Employee Stock Purchase Plan	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.06%	0.13%
Expected term (in years)	6 months	6 months
Dividend yield	0.00%	0.00%
Expected volatility	35.62%	23.95%
Weighted average volatility	35.62%	23.95%

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Earnings Per Share (Components of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Nov. 15, 2019	Jun. 10, 2014
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income	$ 42,569	$ 60,883	$ 136,209	$ 92,580
Net income (loss) available to participating securities	(28)	(89)	(143)	(477)
Net income available to the Company’s common shareholders	$ 42,541	$ 60,794	$ 136,066	$ 92,103
Denominator:
Weighted-average outstanding shares of common stock - basic (in shares)	46,738,073	46,279,515	45,258,819	46,914,750
Dilutive effect of:
Equity incentive plans (in shares)	332,532	29,557	272,178	23,211
Convertible debt (in shares)	1,511,980	0	2,034,065	682,347
Common stock and common stock equivalents (in shares)	48,582,585	46,309,072	47,565,062	47,620,308
Net income per share:
Basic (in usd per share)	$ 0.91	$ 1.31	$ 3.01	$ 1.96
Diluted (in usd per share)	$ 0.88	$ 1.31	$ 2.86	$ 1.93
3.25% Convertible Notes | Convertible Debt
Net income per share:
Stated interest rate						3.25%
1.75% Convertible Notes | Convertible Debt
Net income per share:
Stated interest rate					1.75%

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Earnings Per Share (Narrative) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Earnings Per Share [Abstract]
Options excluded from the computation of diluted earnings per share (in shares)	0	423,000	0	0

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Segment Information (Narrative) (Details)	9 Months Ended
	Sep. 30, 2021 business segment
Segment Reporting [Abstract]
Number of businesses | business	2
Number of reportable segments | segment	3

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Segment Information (Reconciliation of Total Segment Operating Income to Consolidated Operating Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Segment Reporting Information [Line Items]
Revenues	$ 444,252	$ 356,976	$ 1,271,480	$ 1,020,353
Gross profit	379,950	301,154	1,086,018	848,598
Direct costs	283,809	223,716	849,742	642,873
Income from operations	96,141	77,438	236,276	205,725
Operating Segments
Segment Reporting Information [Line Items]
Revenues	444,252	356,976	1,271,480	1,020,352
Gross profit	379,950	301,165	1,086,092	848,645
Direct costs	268,443	209,326	805,957	617,321
Income from operations	111,507	91,839	280,135	231,324
Elimination of inter-segment
Segment Reporting Information [Line Items]
Revenues	(356)	(56)	(766)	(200)
Gross profit	(88)	(56)	(214)	(200)
Direct costs	(88)	(56)	(214)	(200)
Corporate
Segment Reporting Information [Line Items]
Revenues	0	0	0	1
Gross profit	0	(11)	(74)	(47)
Direct costs	15,366	14,390	43,785	25,552
Income from operations	(15,366)	(14,401)	(43,859)	(25,599)
Digital Media | Operating Segments
Segment Reporting Information [Line Items]
Revenues	262,429	186,784	743,280	513,462
Gross profit	238,650	169,394	673,409	457,963
Direct costs	188,950	143,312	548,960	410,109
Income from operations	49,700	26,082	124,449	47,854
Total Cloud Services | Operating Segments
Segment Reporting Information [Line Items]
Revenues	182,179	170,248	528,966	507,090
Gross profit	141,388	131,827	412,897	390,882
Direct costs	79,581	66,070	257,211	207,412
Income from operations	61,807	65,757	155,686	183,470
Fax and Martech | Operating Segments
Segment Reporting Information [Line Items]
Revenues	114,648	98,044	320,829	286,687
Gross profit	91,993	81,435	261,742	238,149
Direct costs	42,057	28,614	107,109	89,121
Income from operations	49,936	52,821	154,633	149,028
Voice, Backup, Security and CPP | Operating Segments
Segment Reporting Information [Line Items]
Revenues	67,531	72,204	208,137	220,403
Gross profit	49,395	50,392	151,155	152,733
Direct costs	37,524	37,456	150,102	118,291
Income from operations	$ 11,871	$ 12,936	$ 1,053	$ 34,442

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Segment Information (Total Assets, Capital Expenditures, Depreciation and Amortization) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Segment Reporting, Other Significant Reconciling Item [Line Items]
Assets	$ 3,830,657		$ 3,830,657		$ 3,665,331
Capital expenditures			87,495	$ 71,266
Depreciation and amortization	66,217	$ 59,612	196,443	163,680
Operating Segments
Segment Reporting, Other Significant Reconciling Item [Line Items]
Assets	3,545,371		3,545,371		3,561,795
Capital expenditures			87,495	71,266
Depreciation and amortization	66,138	57,175	196,226	160,126
Corporate
Segment Reporting, Other Significant Reconciling Item [Line Items]
Assets	285,286		285,286		103,536
Capital expenditures			0	0
Depreciation and amortization	79	2,437	217	3,554
Digital Media | Operating Segments
Segment Reporting, Other Significant Reconciling Item [Line Items]
Assets	1,978,252		1,978,252		2,088,397
Capital expenditures			51,995	43,593
Depreciation and amortization	50,056	36,651	147,482	101,771
Cloud Services | Operating Segments
Segment Reporting, Other Significant Reconciling Item [Line Items]
Assets	1,567,119		1,567,119		$ 1,473,398
Capital expenditures			35,500	27,673
Depreciation and amortization	$ 16,082	$ 20,524	$ 48,744	$ 58,355

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Segment Information (Revenues and Long-lived Assets by Geographic Information) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 444,252	$ 356,976	$ 1,271,480	$ 1,020,353
Long-lived assets	880,944		880,944		$ 972,198
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	366,778	296,054	1,018,277	827,520
Long-lived assets	834,129		834,129		918,125
Canada
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	19,574	17,728	59,957	51,298
Ireland
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	13,980	14,947	59,227	40,520
All other countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	43,920	$ 28,247	134,019	$ 101,015
Long-lived assets	$ 46,815		$ 46,815		$ 54,073

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	$ 1,294,500	$ 1,263,168	$ 1,211,018	$ 1,311,192
Other comprehensive loss	(11,215)		(16,383)
Other comprehensive loss, net of tax	(11,215)	(3,194)	(16,383)	(11,532)
Ending balance	1,369,259	1,176,337	1,369,259	1,176,337
Unrealized Gains (Losses) on Investments
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	283		283
Other comprehensive loss	(114)		(114)
Other comprehensive loss, net of tax	(114)		(114)
Ending balance	169		169
Foreign Currency Translation
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(60,257)		(55,089)
Other comprehensive loss	(11,101)		(16,269)
Other comprehensive loss, net of tax	(11,101)		(16,269)
Ending balance	(71,358)		(71,358)
Total
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(59,974)	(54,800)	(54,806)	(46,462)
Other comprehensive loss, net of tax	(11,215)	(3,194)	(16,383)	(11,532)
Ending balance	$ (71,189)	$ (57,994)	$ (71,189)	$ (57,994)

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Subsequent Events (Details) $ in Millions	Oct. 08, 2021 USD ($)	Oct. 07, 2021 USD ($)	Sep. 24, 2021 USD ($)	Sep. 30, 2021 USD ($)	Oct. 07, 2020
Subsequent Event
Subsequent Event [Line Items]
Spinoff, percentage of stock distributed		80.10%
Shares received, as a ratio		0.3333
Proceeds from spinoff		$ 269.6
Senior notes		$ 500.0
Subsequent Event | Consensus
Subsequent Event [Line Items]
Ownership percentage		19.90%
Bridge Loan Facility | Subsequent Event | Bridge Loan
Subsequent Event [Line Items]
Principal amount		$ 485.0
4.625% Senior Notes | Senior Notes
Subsequent Event [Line Items]
Principal amount				$ 83.3
Stated interest rate					4.625%
Tender offer, aggregate purchase price			$ 90.0
4.625% Senior Notes | Senior Notes | Subsequent Event
Subsequent Event [Line Items]
Tender offer, principal amount	$ 83.3
Stated interest rate	4.625%
Tender offer, aggregate purchase price	$ 90.0