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Discontinued Operations and Dispositions
 12 Months Ended
Dec. 31, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations and Dispositions Discontinued Operations and Dispositions
Consensus Spin-Off
On October 7, 2021, the Separation was completed and the Company transferred J2 Cloud Services, LLC to Consensus 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. Ziff Davis, Inc. (formerly J2 Global, Inc.) retained a 19.9% interest in Consensus following the Separation. We did not retain a controlling interest in Consensus. The Retained Consensus Shares are equity securities for which the Company elected the fair value option, and subsequent fair value changes are included in the assets of and results from continuing operations as of and for the year ended December 31, 2021. At December 31, 2021, our investment in Consensus common stock was remeasured at fair value based on Consensus’ closing stock price, with an unrealized gain of approximately $298.5 million recorded in the Consolidated Statement of Operations and a balance of $229.2 million in the Consolidated Balance Sheet (See Note 5). No gain or loss was recorded on the Separation in the Consolidated Statements of Operations. Certain of the Company’s management and members of its board of directors resigned from the Company as of the Distribution Date and joined Consensus. In addition, one of the Company’s members of its senior management as of December 31, 2021 serves on the board of directors of Consensus.

On October 7, 2021, Consensus paid Ziff Davis approximately $259.1 million of cash in a distribution that is anticipated to be tax-free provided certain requirements are met, and issued $500.0 million of senior notes due 2028 to Ziff Davis, which Ziff Davis then 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 indebtedness outstanding under the Bridge Loan Facility (see Note 10 - Debt). Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A. The Company incurred a net loss on extinguishment of approximately $8.8 million recorded within ‘Loss on Extinguishment of Debt’ component of ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statements of Operations for the year ended December 31, 2021 (see Note 10). The divestiture of the cloud fax business was determined to qualify for US Federal tax-free treatment under certain sections of the Internal Revenue Code.

The accounting requirements for reporting the Company’s cloud fax business as a discontinued operation were met when the Separation was completed as the Separation constitutes a strategic shift that will have a major effect on the Company’s operations and financial results. Accordingly, the consolidated financial statements reflect the result of the cloud fax business as a discontinued operation for all periods presented. The Consolidated Balance Sheets and Consolidated Statements of Operations report discontinued operations separate from continuing operations. The Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows (including Note 19 - Supplemental Cash Flow Information) and Consolidated Statements of Stockholders’ Equity combine continuing and discontinued operations. The Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows and Consolidated Statements of Stockholders’ Equity include the cloud fax activity for January 1, 2021 through October 7, 2021.

The key components of cash flows from discontinued operations were as follows (in thousands):

Years ended December 31,
202120202019
Capital expenditures$15,252 $16,237 $6,996 
Depreciation and amortization$9,010 $11,759 $10,270 
Loss on debt extinguishment$8,750 $37,969 $— 
Amortization of financing costs and discounts$— $1,171 $1,428 
Foreign currency remeasurement gain$— $31,537 $— 
Deferred taxes$8,015 $5,534 $(55,931)
In preparation for and executing the Separation, the Company incurred $11.6 million, net of reimbursement from Consensus, in transaction-related costs including legal and accounting fees during the year ended December 31, 2021, which were recorded in ‘General and administrative expenses’ component of ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statement of Operations. These transaction costs primarily relate to professional fees associated with preparation of regulatory filings and transaction execution and separation activities within finance, tax and legal functions.

In connection with the Separation, Ziff Davis and Consensus entered into several agreements that govern the relationship of the parties following the Separation. These agreements, as well as other activities related to Ziff Davis’s continuing involvement with Consensus are further discussed in Note 21 - Related Party Transactions.

The key components of income from discontinued operations were as follows (in thousands). The Company made an accounting policy election not to allocate interest to discontinued operations. Interest expense included in discontinued operations relates to the 6.0% Senior Notes issued by J2 Cloud Services, LLC and the Bridge Loan Facility, which was required to be repaid as part of the Separation.

Years ended December 31,
202120202019
Revenues$270,248 $330,764 $321,590 
Cost of revenues(44,306)(53,379)(49,991)
Sales and marketing(40,980)(47,116)(51,522)
Research, development and engineering(5,814)(7,146)(9,745)
General and administrative(39,279)(26,852)(21,475)
Interest expense and other(13,856)(44,220)(44,080)
Income before income taxes126,013 152,051 144,777 
Income tax expense (benefit)30,694 30,043 (33,136)
Income from discontinued operations, net of income taxes$95,319 $122,008 $177,913 
The following table summarizes the Balance Sheet as of December 31, 2020 (in thousands):

December 31,
2020
ASSETS
Cash and cash equivalents$66,210 
Accounts receivable, net16,071 
Prepaid expenses and other current assets1,748 
Total current assets, discontinued operations84,029 
Property and equipment, net25,053 
Operating lease right-of-use assets25,711 
Trade names, net29,350 
Customer relationships, net13,678 
Goodwill342,430 
Other purchased intangibles, net1,681 
Deferred income taxes, noncurrent44,350 
Other non-current assets1,269 
Total assets, discontinued operations$567,551 
LIABILITIES
Trade accounts payable and accrued expenses$32,795 
Income taxes payable, current1,307 
Deferred revenue, current24,512 
Operating lease liabilities, current2,578 
Total current liabilities, discontinued operations61,192 
Deferred revenue, noncurrent240 
Operating lease liabilities, noncurrent25,549 
Liability for uncertain tax positions3,993 
Deferred income taxes, noncurrent5,392 
Other long-term liabilities3,063 
Total liabilities, discontinued operations$99,429 

B2B Back-up and Voice Asset Sales
The Company completed the following dispositions that did not meet the criteria for discontinued operations
During the first quarter of 2021, the Company committed to a plan to sell certain Voice assets in the United Kingdom as they were determined to be non-core assets. Such assets were recorded within the Cybersecurity and Martech reportable segment. On February 9, 2021, in a cash transaction, the Company sold the Voice assets. The total gain recognized on the sale of these Voice assets was $2.8 million which was recorded in (loss) gain on sale of businesses on the Consolidated Statement of Operations in the year ended December 31, 2021.

During the first quarter of 2021, the Company committed to a plan to sell its B2B Backup business as it was determined to be a non-core business. The B2B Backup business met the held for sale criteria, and accordingly, the assets and liabilities were presented as held for sale on the Consolidated Statement Balance Sheets at March 31, 2021 and June 30, 2021. The business is recorded within the Cybersecurity and Martech reportable segment. During the second quarter of 2021, the Company received an offer to purchase the B2B Backup business and management determined that the fair value of the business less cost to sell was lower than its carrying amount. As a result, the Company recorded an impairment to goodwill of $32.6 million during the second quarter of 2021, which was recorded in impairment of business on the Consolidated Statement of Operations (see Note 9 - Goodwill and Intangible Assets). On September 17, 2021, in a cash transaction, the Company sold the B2B Backup business. The total loss recognized on the sale of the B2B Backup business was $24.6 million which was recorded in (loss) gain on sale of businesses on the Consolidated Statement of Operations in the year ended December 31, 2021.
During the second quarter of 2020, the Company committed to a plan to sell certain Voice assets in Australia and New Zealand as they were determined to be non-core assets. Such assets were recorded within the Cybersecurity and Martech reportable segment. On August 31, 2020, in a cash transaction, the Company sold these Voice assets for a gain of $17.1 million which was recorded in gain on sale of businesses on the Consolidated Statement of Operations in the year ended December 31, 2020.