ZD 10-K & 10-Q changes, risk factors and insider trading

Before deciding to invest in Ziff Davis or to maintain or increase your investment, you should carefully consider the risks described below in addition to the other cautionary statements and risks described elsewhere in this Annual Report on Form 10-K and our other filings with the SEC, including our subsequent reports on Forms 10-Q and 8-K. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may affect our business. If any of these known or unknown risks or uncertainties actually occurs,occur, our business, prospects, financial condition, operating results, and cash flows could be materially adversely affected. In that event, the market price of our common stock will likely decline and you may lose part or all of your investment.

•We face risks associated with system failures, securitycybersecurity breaches, and other technological issues.

•Potential indemnification liabilities to Consensus pursuant to the separation agreementthird-parties could materially and adversely affect our businesses, financial condition, results of operations, and cash flows.

•We operate across many different markets and mayare be exposedsubject to a varietyrapidly evolving landscape of governmentlaws and private actions, laws, or self-regulatory developmentsregimes regardingin cybersecurity,the privacy,United data security,States and datainternationally. protectionCompliance with uncertainthese interpretationsobligations andmay potentiallyrequire operational changes, lead to a significant compliance costs.costs, and may limit our ability to collect, use, or monetize data.

•Certain features of our Outstanding Debt may delay or prevent an otherwise beneficial attempt to take over our Company.Company or otherwise restructure our business operations.

•Conversions of the 1.75% Convertible Notes and the 3.625% Convertible Notes (collectively, the “Convertible Notes’Notes”) would dilute the ownership interest of our existing stockholders.

•We are a holding company and our operations are conducted through, and substantially all of our assets are held by, our subsidiaries, which may be subject to certain restrictions on their ability to (i) pay dividends to usus, (ii) to fund any dividends on our stock, (iii) pay interest on our Outstanding Debt, andor (iv) fund other holding company expenses.

A system failure, security breach, cyber-attack,cyberattack, or other technological risk could delay or interrupt service to our customers, harm our reputation and business, lead to a loss of customers, or subject us to significant liability.

We face a wide variety of cyber-attackscyberattacks including attempts to gain unauthorized access to customer accounts.

Increased information technology security threats and more sophisticated cybercrimes and cyberattacks, including computer viruses and other malicious codes, ransomware, unauthorized access attempts, denial-of-service attacks, phishing, social engineering, hacking, and other types of attacks, pose a risk to the security and availability of our information technology systems, networks, products, solutions, and services, including those that are managed, hosted, provided, or used by third parties (and which may not provide the same level of information security as our own products, systems, or solutions), as well as the confidentiality, availability, and integrity of our data and the data of our customers, partners, consumers, employees, stockholders, suppliers and others. Also, many of our services are web-based, and the amount of data we store for our users has been increasing. Despite the implementation of security measures, our infrastructure, and that of our partners, vendors, and other third parties may be vulnerable to computer viruses, errors, bugs, defects, hackers, or similar disruptive problems caused by our vendors, partners, other third parties, subscribers, employees, or other internet users who attempt to invade public and private data networks. As seen in the industries in which we operate and others, these activities have been, and will continue to be, subject to continually evolving cybersecurity and technological risks. The rapid evolution and increased adoption of AI technologies may intensify our cybersecurity risks, as we may be unable to keep pace with the increasing sophistication of AI-based cybersecurity threats. Cyberattacks have become more difficult to detect and respond to since they increasingly employ AI and machine learning techniques, such as generative AI-phishing, deepfake impersonations, automated vulnerability discovery, adaptive malware, and large-scale credential-stuffing campaigns. Further, in some cases we do not have in place disaster recovery facilities for certain ancillary services.

A significant portion of our operations relies heavily on the secure processing, storage, and transmission of confidential and other sensitive data. For example, a significant number of our Cybersecurity & Martech customers authorize us to bill them directly for all transaction fees charged by us. We rely on encryption and authentication technology to effect secure transmission of confidential information, including customer financial information, which is highly dependent on our billing systems functioning. Advances in computer capabilities, new discoveries in the field of cryptography, or other developments may result in a material compromise or breach of the technology used by us, our partners, our vendors, or other third parties to protect transaction and other confidential data. Any system failure or security breach that causes interruptions or data loss in and to our operations and systems or those of our partners, vendors, customers, or other third parties, whether due to human errorerror, including related to the improper use of AI, or misconduct, system errors, or vulnerabilities in our or our third party service providers’ products, systems, or solutions, or which leads to the misappropriation of our or our customers’ confidential information, including as a result of the introduction of new and emerging technologies such as AI, could result in a significant liability to us (including in the form of judicial decisions and/or settlements, regulatory findings and/or forfeitures, and other means), cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or the media), cause a loss of confidence in our products and services, and deter current and potential customers from using our services.

We use vendors to assist with cybersecurity risks, but these vendors may not be able to assist us adequately in preparing for or responding to a cybersecurity incident. We maintain insurance related to cybersecurity risks, but this insurance may not be sufficient to cover all of our losses from any breaches or other adverse consequences related to a cybersecurity event. Any of these events could have a material adverse effect on our business, prospects, financial condition, operating results, and cash flows, or a negative impact to our reputation could cause us to suffer other negative consequences. For example, we may incur costs related to the investigation of data breaches (including for forensic analysis, legal advice, and breach notifications); remediation costs (such as liability for stolen assets or information, repairs of system damage, and incentives to customers or business partners in an effort to maintain relationships after an attack); increased cybersecurity protection costs (which may include the costs of making organizational changes, deploying additional personnel and protection technologies, training employees, recruiting people with specific expertise, and engaging third-party experts and consultants); lost revenues resulting from (i) the unauthorized use of proprietary information, (ii) the failure to retain or attract customers following an attack, or (iii) the diversion of our resources away from revenue-generating activity and towards remediation activity; litigation and legal risks (including regulatory actions by state and federal governmental authorities and non-U.S. authorities); increased insurance premiums; reputational damage that adversely affects customer or investor confidence; damage to our competitiveness and stock price; and diminished long-term shareholder value. To date, such events have not resulted in the material impairment of our business operations.

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

The use of copyrighted material by generative AI and related technologies has not been fully interpreted by federal, state, or international courts, and the legal and regulatory framework for generative AI continues to evolve and remains uncertain. It is possible that new laws and regulations will be adopted in the jurisdictions in which we operate, or existing laws and regulations may be interpreted in new ways, which may affect how operators of generative AI and related technologies seek to use our content. For example, in 2024 California enacted a range of laws regulating the use and development of AI, which generally relate to transparency, privacy, and fairness, among other concerns. Furthermore, in Europe the EU’s AI Act wasbegan publishedto inapply theon OfficialFebruary Journal2, 2025, with remaining requirements becoming effective on a staggered basis until August 2027. The EU AI Act will impose material requirements on both providers and users of theAI European Union on July 12, 2024technologies, and enteredwill intoprohibit forcecertain onAI Augustpractices, 1,with 2024.infringement punishable by sanctions of up to 7% of annual worldwide turnover or 35 million euros, whichever is higher. We are still evaluating the impact of these laws on our business. The cost for us to enforce such laws and regulations, or otherwise protect our content and intellectual property rights, could be significant. Moreover, any failure or perceived failure by us to comply with new laws or regulations concerning AI could have an adverse impact on our business. Anticipated further evolution of regulations and legislation on this topic may substantially increase the penalties to which we could be subject in the event of any non-compliance. Compliance with these laws is challenging, constantly evolving and time consuming and federal regulators, state attorney generals and plaintiff’s attorneys have been and will likely continue to be active in this space. We may incur substantial expense in complying with legal obligations to be imposed by new regulations and we may be required to make significant changes to our solutions and expanding business operations, all of which may adversely affect our operations.

The markets in which we operate are highly competitive and are undergoing rapid technological changes. Some of our competitors include major companies with much greater resources and significantly larger customer bases than we have. Some of these competitors offer their services at lower prices than we do. These companies may be able to develop and expand their network infrastructures and capabilities more quickly, adapt more swiftly to new or emerging technologiestechnologies, including AI implementations, and changes in customer requirements, take advantage of acquisition and other opportunities more readily, and devote greater resources to the marketing and sale of their products and services than we can. There can be no assurance that additional competitors will not enter markets that we are currently serving and plan to serve or that we will be able to compete effectively. Competitive pressures may reduce our revenue, operating profits, or both.

A significant part of our revenues depends on prompt and accurate billing processes. Customer billing is a highly complex process, and our billing systems must efficiently interface with third-party systems, such as those of credit card processing companies. Our ability to accurately and efficiently bill our customers is dependent on the successful operation of our billing systems and the third-party systems upon which we rely, such as our credit card processor, and our ability to provide these third parties the information required to process transactions. To the extent there are increases in payment processing fees, disruptions in our or third-party payment processing systems; errors in charges made to subscribers; material changes in the payment ecosystem such as large reissuances of payment cards by credit card issuers and the introduction of new subscription management tools; or significant changes to certifications, rules, regulations, industry standards or laws concerning payment processing; or other changes that affect our billing systems, our ability to accept payments or retain users could be hindered, we could experience increased costs, and we could be subject to fines and civil liability, which could harm our reputation and adversely impact our revenues, operating expenses and/or results of operations. In addition, our ability to offer new services or alternative-billing plans is dependent on our ability to customize our billing systems. Any failures or errors in our billing systems or procedures could impair our ability to properly bill our current customers or attract and service new customers, and thereby could materially and adversely affect our business and financial results.

The successful operation of our business depends upon the supply of critical business elements and marketing relationships from other companies.

We depend upon third parties for critical elements of our business, including technology, infrastructure, customer service, and sales and marketing components. We rely on private third-party providers for our internet, telecommunications, website traffic, and other connections and services and for co-location of a significant portion of our servers and other hosting services. In addition, we rely on third-party platforms to facilitate and provide access to products sold through our sites. Our advertising operations rely on ad servers and ad exchanges, that could be disrupted, and providers of such services may leverage their power to alter the structure or operations of the ad servers and ad exchanges. Any disruption in the services provided by any of these suppliers, any adverse change in access to their platforms or services or in their terms and conditions of use or services, or any failure by them to handle current or higher volumes of activityactivity, or any other issues with the services they provide could have a material adverse effect on our business, prospects, financial condition, operating results, and cash flows. To obtain new customers, we have marketing agreements with operators of leading search engines and websites and employ the use of resellers to sell our products. These arrangements typically are not exclusive and do not extend over a significant period of time. Failure to continue these relationships on terms that are acceptable to us or to continue to create additional relationships could have a material adverse effect on our business, prospects, financial condition, operating results and cash flows.

We continually assess the strategic fit of our existing businesses and may divest or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment. TheseOur transactionsability poseto consummate a sale of one or more of our business lines pursuant to our announced review of potential value-creating opportunities poses risks and challenges that could negatively impact our business. For example, when we decide to sell or otherwise dispose of a business or assets, we may be unable to do so on satisfactory terms within our anticipated timeframe or at all, and even after reaching a definitive agreement to sell or dispose a business the sale is typically subject to satisfaction of pre-closing conditions which may not become satisfied. In addition, divestitures or other dispositions may dilute our earnings per share, have other adverse financial and accounting impacts, and distract management, and disputes may arise with buyers. Furthermore, we have retained responsibility for and/or have agreed to indemnify buyers against some known and unknown contingent liabilities related to a number of businesses we have sold or disposed of. The resolution of these contingencies has not had a material effect on our financial statements but we cannot be certain that this favorable pattern will continue.

Potential indemnification liabilities to Consensus pursuant to the separation agreementthird-parties could materially and adversely affect our businesses, financial condition, results of operations, and cash flows.

WeOccasionally, enteredwe enter into aliability separation and distribution agreement and relatedindemnification agreements with Consensus to govern the separation and distribution of Consensus and the relationship between the two companies going forward.third-parties. These agreements provide for specific indemnity and liability obligations of each party and could lead to disputes between the parties. If we are required to indemnify Consensusa third-party under the circumstances set forth in these agreements, we may be subject to substantial liabilities. In addition, with respect to the liabilities for which Consensusa third-party has agreed to indemnify us under these agreements, there can be no assurance that the indemnity rights we have against Consensusa third-party will be sufficient to protect us against the full amount of the liabilities, or that Consensusa third-party will be able to fully satisfy its indemnification obligations. Each of these risks could negatively affect our businesses, financial condition, results of operations, and cash flows.

The application of existing domestic and international laws and regulations to us relating to issues such as labor, defamation, pricing, advertising, taxation, promotions, billing, e-commerce, consumer protection, accessibility, content regulation, data privacy, cybersecurity, AI, youth safety, export restrictions and sanctions, telecommunications, mobile communications and media, television, intellectual property ownership and infringement, real estate, anti-corruption, foreign exchange controls and cash repatriation restrictions, anti-competition, climate, environmental, health, safety, and accreditation, in many instances, is unclear or unsettled. In addition, we will also be subject to any new laws and regulations directly applicable to our domestic and international activities. Compliance with these laws, regulations and similar requirements may be onerous and expensive, and these laws may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business. Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation, could individually or in the aggregate make our products and services less attractive to our customers, delay the introduction of new products in one or more regions, or cause us to change or limit our business practices. We have implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance that our employees, contractors, or agents will not violate such laws and regulations or our policies and procedures. Further, the application of existing laws to us or our subsidiaries regulating or requiring licenses for certain businesses of our advertisers including, for example, distribution of pharmaceuticals, alcohol, or other regulated substances, adult content, tobacco, or firearms, as well as insurance and securities brokerage, and legal services, can be unclear. Internationally, we may also be subject to laws regulating our activities in foreign countries and to foreign laws and regulations that are inconsistent from country to country. Our businesses utilize contractors, freelancers and/or staff from third-party outsourcers to provide content and other services. However, in the future, arrangements with such individuals may not be deemed appropriate by a relevant government authority, which could result in additional costs and expenses. We may incur substantial liabilities for expenses necessary to defend against litigation regarding these laws and regulations or to otherwise comply with these laws and regulations, and we may incur potentially substantial penalties for any failure to comply. Compliance with these laws and regulations may also cause us to change or limit our business practices in a manner adverse to our business.

Cybersecurity, data privacy, data security, consumer protection, data protection, and data protectionAI laws are constantly evolving at the federal and state levels in the United States, as well as abroad. We are currently subject to such laws both at the federal and state levels in the U.S. as well as similar laws in a variety of international jurisdictions. For example, our use or sharing or certain data subjects us to the Video Privacy Protection Act ("VPPA"), the California Invasion of Privacy Act ("CIPA"), the California Consumer Privacy Act (the “CCPA”) as amended by the California Privacy Rights Act (the “CPRA”) and may subject us to additional comprehensive or sector-specific U.S. state privacy laws, as well as international laws, including the General Data Protection Regulation (“GDPR”), asand discussedthe moreEU below.Data Act. The interpretation of these laws may be uncertain and may also impose conflicting obligations on us.

GovernmentPrivacy and privatecybersecurity actionslaws, oras well as self-regulatory developments may subject us to cybersecurity, privacy, data security, and data protection laws withhave uncertain interpretations as well asand/or impose conflicting obligations on us and could adversely affect our ability to conduct our business.business, and may lead to regulatory investigations, government enforcement, and private actions.

The use of consumer data is a topic of active interest among federal, state, and international regulatory bodies, as well as by private parties, and the legal and regulatory environment is unsettled and evolving. Federal, state, and international laws and regulations govern the collection, use, retention, disclosure, sharing, and security of data that we receive from and about our users. Our privacy and cookie policies and practices concerning the collection, use, and disclosure of user data are posted on our websites.

Certain business units within our Digital Media Businesses and Connectivity business collect and sell data about their users’ online behavior, and the revenue associated with this activity could be impacted by government regulation and enforcement, industry trends, self-regulation, technology changes, consumer behavior and attitude, and private action.actions. We also use such information to work with our advertisers to more effectively target ads to relevant users and consumers, which ads command a higher rate.

We append data from third-party sources to augment our user profiles. If we are unable to acquire data from third-party sources for whatever reason, if we are limited in use of such data, or if there is a marked increase in the cost of obtaining such data, our ability to personalize content and provide marketing solutions could be negatively impacted.

Numerous other countries have, or are developing, laws governing the collection, use and transmission of personal information as well.information. For example, we are subject to the GDPR which governs the collection and use of personal data in the European Union (“EU”), including by companies outside of the European Union. The GDPR harmonizes EU data privacy laws and contains significant obligations and requirements that have resulted in a greater compliance burden with respect to our operations and data use in Europe, which will continue to increase our costs. The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification, and the use of third-party processors in connection with the processing of the personal data. Individuals also have the right to compensation under the GDPR.

Additionally, on March 25, 2022, the U.S. and European Commission announced that they had agreed in principle to a new Trans-Atlantic Data Privacy Framework (the “TDPF”) to enable trans-Atlantic data flows and address the concerns raised in the Schrems II decision.decision (there are equivalent frameworks for transfers from the UK and Switzerland). To implement the commitments of the U.S. under the TDPF, in October 2022, President Biden signed an Executive Order on Enhancing Safeguards for the United States Signals Intelligence Activities (the Executive Order). This subsequently prompted the European Commission to formally launch the process to adopt an adequacy decision based on the Executive Order in December 2022, and the adequacy decision was adopted on July 10, 2023. The TDPF has been recognized as adequate under the E.U. to allow transfers of personal data from the E.U. to companies in the U.S. that have self-certified to the framework. However, the TDPF isremains subject to legal challenges and maycould be struck downinvalidated by the EU courts.courts, which could increase compliance costs and could disrupt or restrict our cross-border data transfers.

The CCPA, in its original form and as amended under the CPRA, similarly contains significant obligations and requirements that have resulted in a greater compliance burden with respect to our operations and data usage of California residents, which will continue to increase our costs. The CCPA covers businesses that obtain or access personal information of California resident consumers, grants consumers enhanced privacy rights and control over their personal information and imposes significant requirements on covered companies with respect to consumer data privacy rights. The CCPA provides consumers with the right to opt out of the sale of their personal information including the requirement to include a “Do Not Sell” link on our websites and applications that sell personal data of California resident consumers. Individuals may have the right to file a class action under the CCPA in certain circumstances. In November 2020, California voters adopted the CPRA that amends the CCPA, including creating a new agency to implement and enforce the law and enhancing and strengthening regulatory requirements and individual protections under the CCPA. The CPRA took effect on January 1, 2023. A numberAs of January 19, 2026, other states have enactedenacted, orand more are considering enacting similar privacy, data protection and information security laws, which may subject us to additional requirements and restrictions that could have an impact on our business, further complicating our privacy compliance obligations through the introduction of increasingly disparate requirements across the various U.S. jurisdictions in which we operate. Additionally, Washingtonseveral statestates hashave enacted ahealth-specific healthprivacy laws or strengthened protection of health- and locationlocation-related data privacy law,data, and other states are considering similar legislation. Congress is considering legislation that may preempt some or all of such U.S. state privacy laws, providingbut provide a more robust private right of action.

New and expanding “Do Not Track” regulations have been enacted or proposed that protect users’ right to choose whether or not to be tracked online. These regulations seek, among other things, to allow consumers to have greater control over the use of private information collected online, to forbid the collection or use of online information, to demand a business to comply with their choice to opt out of such collection or use, and to place limits upon the disclosure of information to third-party websites. Similarly, exercise of the “Do Not Sell” right under the CCPA and other state privacy laws limits a business’ ability to monetize certain personal information collected online. Such laws and regulations could have a significant impact on the operation of our advertising and data businesses. U.S. regulatory agencies have also placed an increased focus on online privacy matters and, in particular, on online advertising activities that utilize cookies or other tracking tools. Consumer and industry groups have expressed concerns about online data collection and use by companies, which has resulted in the release of various industry self-regulatory codes of conduct and best practice guidelines that are binding for member companies and that govern, among other things, the ways in which companies can collect, use and disclose user information, how companies must give notice of these practices and what choices companies must provide to consumers regarding these practices.

We may be required or otherwise choose to adopt Do Not Track mechanisms or self-regulation principles or provide opt-outs from the sale of certain user data, in which case our ability to use our existing tracking technologies, to collect and sell user behavioral data, and permit their use by other third parties could be impaired. This could cause our revenues to decline and adversely affect our operating results. Moreover, U.S. and foreign governments have enacted or considered or are considering legislation or regulations that could significantly restrict our ability to collect, augment, analyze, use, and share de-identified or anonymous data, which could increase our costs and reduce our revenue.

While we work to comply with all applicable law and relevant “best practices” addressing cybersecurity, data, privacy, data security, consumer protection, and data protection, this is an area of the law that is constantly evolving as are the relevant industry codes and threat matrix. Further it is possible that applicable law and “best practices” are interpreted in an inconsistent or conflicting manner either by differing federal, state or international authorities or across the jurisdictions in which we operate. Some privacy laws are currently being challenged and litigation in this space could impact the privacy rights of our community, including modifying the ability of third parties to obtain private communications between users, which in turn may negatively impact users' experience, trust, and satisfaction and decrease their engagement with our products.

Further, failure or perceived failure by us to comply with our policies, applicable laws and regulatory requirements, or industry self-regulatory principles related to the collection, use, sharing, or security of personal information, or other privacy, data, data-retention or data­ protection matters could result in a loss of user confidence in us, damage to our brands, and ultimately in a loss of users and advertising partners, which could adversely affect our business. Changes in these or any other laws and regulations or the interpretation of them could increase our future compliance costs, limit the amount and type of data we can collect, transfer, share, or sell, make our products and services less attractive to our users, or cause us to change or limit our business practices. Further, any failure on our part to comply with any relevant laws or regulations may subject us to significant civil or criminal liabilities.

The Privacy Standards and Security Standards under the HIPAA establish a set of basic national privacy and security standards for the protection of individually identifiable health information by health plans, healthcare clearinghouses, and certain healthcare providers, referred to as “covered entities”, and the business associates with whom such covered entities contract for services. Notably, whereas HIPAA previously directly regulated only these covered entities, the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”) made certain of HIPAA’s Privacy and Security Standards directly applicable to covered entities’ business associates. Business associates are subject to significant civil and criminal penalties for failure to comply with applicable Privacy and Security Standards. Additionally, certain states have adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA.

As of February 21, 2025, substantiallySubstantially all of our outstanding shares of common stock wereare available for resale, subject to volume and manner of sale limitations applicable to affiliates under SEC Rule 144. Sales of a substantial number of shares of common stock on the public market or the perception of such sales could cause the market price of our common stock to decline. These sales also might make it more difficult for us to issue equity securities in the future at a price that we think is appropriate, or at all.

•General market conditions, including interest rates and prolonged or increased inflation;

Following changes to our internal reporting structure, theThe Company concluded that it has five operating segments which are now presented as the following five reportable segments: 1) Technology & Shopping, 2) Gaming & Entertainment, 3) Health & Wellness, 4) Connectivity, and 5) Cybersecurity & Martech. The current reportable segments of Technology & Shopping, Gaming & Entertainment, Health & Wellness, and Connectivity previously were included in a Digital Media reportable segment. Prior period segment information is presented on a comparable basis to conform to this new segment presentation with no effect on previously reported consolidated results. Refer to Note 17 — Segment Information for additional detail.

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

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

We use certain metrics to generally assess the operationalAdvertising and financialPerformance performanceMarketing of our businesses.- For our advertising and performance marketing businesses,performance, management has identified net advertising and performance marketing revenue retention, the number of customers, and quarterly revenue per customer as relevant to investors’ and others’ assessment of our financial condition and results of operations. Net advertising and performance marketing revenue retention is an indicator of our ability to retain the spend of our existing advertisers year over year, which we view as a reflection of the effectiveness of our advertising and performance marketing platforms. Similarly, we monitor the number of our customers and the revenue per customer, as defined below, as these metrics provide further details related to our reported revenue and contribute to certain of our business planning decisions.

(1)Net advertising and performance marketing revenue retention equals (i) the trailing twelve month revenuerevenues recognized related to prior year customers in the current year period (excluding revenuerevenues from acquisitions during the stub period) divided by (ii) the trailing twelve month revenuerevenues recognized related to prior year customers in the prior year period (excluding revenuerevenues from acquisitions during the stub period). This excludes customers that generated less than $10,000 of revenuerevenues in the measurement period.

(2)Excludes customers that spentgenerated less than $2,500 in the quarter.

The following table sets forth certain key operating metrics for the subscription and licensing revenues based on the reportable segment for the three months ended December 31, 20242025 and 20232024:

(1) Represents the quarterly average of the end of month customer counts.counts Customers associated with each reportable segment may not foot precisely since each is presented independently.(rounded).

Advertising and performance marketing revenues are earned primarily from the delivery of advertising services and from marketing, performance marketing, and production services. Revenues from the delivery of advertising services are earned on websites and applications that are owned and operated by the Company and on those websites and applications that are part of the Company’s advertising network. Revenues are primarily earned by generating traffic to the Company’s websites, apps, and third-party platforms on which brands of the Company have a presence and monetizingmonetize this traffic. The value provided to the customer is primarily derived from the provision of traffic the Company generates from its specific content within each vertical, as well as data obtained by the website or app traffic. Such revenues are generally recognized over the period in which the products or services are delivered.

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, respectively. The vast majority of the Company’s advertising and performance marketing revenuerevenues isare recognized on a gross basis as the Company primarily acts as a “principal” as defined under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customer (“ASC 606”). Revenues recognized on a gross basis are 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; and (ii) through the Company’s lead-generation business. The Company records revenuerevenues on a net basis with respect to revenuerevenues 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 platforms, primarily related to the transfer of functional intellectual property. The Company also records revenuerevenues on a net basis with respect to revenuethe transfer of functional intellectual property through the third-party gaming platforms and with respect to revenues earned from servicing client gift card programs where we collect the total value of the gift card on our customers’ behalf.programs.

Revenues from subscriptions are earned through (i) the granting of access to, or delivery of, data products or services to customers;customers, (ii) usage-based fees, and (iii) reselling various third-party solutions, primarily through the Company’s email security line of business. Subscriptions cover video games and related content, health information, data, and other copyrighted material. Revenues are also earned from listing fees, subscriptions to online publications, and from other sources. Third-party solutions, along with the Company’s proprietary products, allow the Company to offer customers a variety of solutions to better meet the customer’s needs. Subscription revenues are primarily recognized over the contract term. Revenues related to the provision of access to historical data for certain services are recorded at the time of delivery. In instances where usage-based fees are charged, a significant portion of which are paid in advance, the Company defers the portions of monthly, quarterly, semi-annual, and annual fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned.

Other revenues primarily include those from the sale of hardware used in conjunction with software described above, online course revenue, andrevenues, game publishing revenue.revenues, and revenues from a customer acquisition platform for subscription services companies. Hardware product and related software performance obligations, such as those relating to 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.

The Company determines whether revenuerevenues 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, respectively. The majority of the other revenuerevenues isare recognized on a gross basis as the Company primarily acts as a “principal” as defined under ASC 606. The Company records revenuerevenues on a net basis with respect to games sold on third-party platforms.

The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic 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. The Company tests goodwill for impairment annually on October 1st at the reporting unit level, or more frequently if indicators of impairment exist, or if a decision is made to dispose of a business. 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 was more likely than not that the fair value of the reporting unit is less than its carrying amount, it then performs an impairment test of 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 a mix of an income approach and a market approach. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference.

FollowingDuring the impairmentsyear atended December 31, 2025, on its annual assessment date, the twoCompany performed quantitative fair value tests of all of its reporting units following a sustained decline in the Company’s stock price. Based on the quantitative fair value tests, the carrying value of one reporting unit within the TechnologyCybersecurity & ShoppingMartech reportable segment exceeded its fair value, and the Company recorded an impairment of approximately $17.6 million during the year ended December 31, 2024,2025. The Company also performed an interim quantitative test as of December 31, 2025 on one of its reporting units within its Technology & Shopping reportable segment and the fair value was in excess of its carrying value and no impairment was recorded. Following the impairment at one reporting unit within the Cybersecurity & Martech reportable segment, there was no excess of fair value over the carrying value at thosethat reporting units.unit. SoGoodwill anyat further decrease in estimated fair value of these twothis reporting units will result in an additional impairment charge to goodwill. Goodwill for these two reporting unitsunit was $322.1$160.4 million as of December 31, 2024.2025. There were no other reporting units with less than 10% excess fair value over carrying value as of the most recent evaluation that may be at risk of impairment as of December 31, 2024.2025. Changes in market conditions, and key assumptions made in future quantitative assessments, including expected cash flows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge.

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 FinancialFASB Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment (“ASC 360”), which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to the expected undiscounted future net cash flows generated by the asset. If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extent of the difference. In addition, the Company reviews the useful lives of its long-lived assets whenever events or changes in circumstances indicate that these lives may be changed.

Our revenues primarily consist of revenues from (i) advertising and performance marketing revenues, which are earned from the delivery of advertising services, marketing, performance marketing, and production services, and (ii) subscription and licensing revenues, which are earned through the granting of access to, or delivery of, certain data products or services to customers, usage-based fees, and by reselling various third-party solutions, primarily through the Company’s email security line of the Company.business. Subscription and licensing revenues primarily consist of revenues from “fixed” customer subscription and licensing revenues and “variable” revenues generated from actual usage of our services.

Our revenues increased for the year ended December 31, 20242025 compared to the prior period primarily due to a $30.7$45.7 million increase in advertising and performance marketing revenue driven primarily by an increase of $34.9 million in our Technology & Shopping reportable segment and a $6.7 million increase in our Gaming & Entertainment reportable segment, partially offset by a decline of $9.7$36.3 million in our Health & Wellness reportable segment and a $5.3 million increase in our Technology & Shopping reportable segment. Subscription and licensing revenues increased $12.1$13.0 million due primarily to an increase of $8.4$16.1 million in our Connectivity reportable segment, $4.2 million in our Health & Wellness reportable segment, $6.7and $3.3 million in our Connectivity reportable segment, and $4.7 million in our GamingTechnology & EntertainmentShopping reportable segment, partially offset by a decrease of $6.6$10.4 million in our Cybersecurity & Martech reportable segment. IncludedOther revenues decreased $9.2 million due primarily to a $13.9 million decrease in the Technology & Shopping reportable segment, partially offset by a $4.9 million increase in the Cybersecurity & Martech reportable segment as a result of a current year acquisition. Included in revenue during the year ended December 31, 20242025 was $83.2$34.5 million of incremental revenue contributed by businesses acquired during 2024.2025.

Direct costs represent the company’sCompany’s cost of revenuerevenues and primarily include costs associated with compensation for personnel directly involved in revenue generation, content fees, production costs, royalty fees, hosting and licensing costs, and processing fees. The increase in direct costs for the year ended December 31, 20242025 compared to the prior period was primarily due to a $5.5$3.0 million increase in processingcloud fees,computing, software, and other related expenses, a $4.6$2.4 million increase in royalties,award costs due to customer shift toward higher-cost programs, and a $2.7$2.3 million increase in databaseprofessional hostingand costs.other third-party services, partially offset by a $2.8 million decrease in advertising and marketing related expenses.

Sales and marketing costs consist primarily of internet-based advertising, sales and marketing, personnel costs, and other business development related expenses. Our internet-based advertising relationships consist primarily of fixed cost and performance-based (cost-per-impression, cost-per-click, and cost-per-acquisition) advertising relationships with an array of online service providers. The increase in sales and marketing expenses during the year ended December 31, 20242025 compared to the prior period was primarily due to an $8.5 million increase in professional and other third-party services, a $28.7$7.4 million increase in partner payments, a $3.8 million increase in advertising and marketing related expenses, and a $2.9 million increase in salaries, benefits, and other employee expenses related primarily to acquisitions in the period and severance costs, including those associated with a voluntary buyout program, and a $5.0 million increase in expenses for software purchases.expenses.

Research, development, and engineering costs consist primarily of personnel-relatedsalaries, benefits, and other employee expenses. The decrease in research, development, and engineering costs for the year ended December 31, 20242025 compared to the prior period was primarily due to a $1.4$8.7 million decrease in salaries, benefits, and other employee expenses primarily as a result of anlower severance, and a $1.5 million decrease in professional and other third-party services, partially offset by a $4.7 million increase in capitalizedcloud costscomputing, software, and other related to the nature of projects in 2024 as compared with projects in 2023.expenses.

General, administrative, and other related costs consist primarily of personnel-relatedsalaries, benefits, and other employee expenses including share-based compensation and severance, changes in the fair value associated with contingent consideration, bad debt expense, professional fees, and insurance costs. The increase in general, administrative, and other related costs for the year ended December 31, 20242025 compared to the prior period was primarily due to $13.1a $5.2 million higherincrease in professional and other third-party services due to ongoing litigations, a $3.3 million increase in other expenses, and a $2.2 million increase in cloud computing, software, and other related expenses, partially offset by a $4.2 million decrease in salaries, benefits, and other employee expensesexpenses. driven primarily by higher share-based compensation expense and a $5.4 millionThe increase in third-party debt modification costs, acquisition-related fees, and other legal-relatedexpenses fees,was partiallyprimarily offsetdriven by a $6.1 million decrease in expense from changes in estimated amounts of deferred acquisition payments related to previously acquired businesses in 2024 that did not recur in 2025 and partially offset by a $3.7$2.8 million decreasereduction in officecontingent relatedconsideration expenses.accrual in 2025 for the business acquired in 2023.

Depreciation and amortization costs consist of depreciation related to property and equipment, including internally developed software, as well as amortization of intangible assets recorded in connection with business acquisitions, and other intangible assets of the Company. The decreaseincrease in depreciation and amortization costs for the year ended December 31, 20242025 compared to the prior period was primarily due to a decline of $27.4$14.2 million increase in depreciation expense as capitalized software was placed in service and a $4.0 million increase in amortization expense primarily as a result of new intangible assets becameacquired fullyin amortized2024 and due towhereby a declinefull year of amortization is included in the amortization2025 of customer relationships as more amortization expense is recognized earlier in the useful life based on estimated economic benefit.results.

Goodwill impairment was $17.6 million for the year ended December 31, 2025 and related to a reporting unit within the Cybersecurity & Martech reportable segment. Goodwill impairment was $85.3 million and $56.9 million for the yearsyear ended December 31, 20242024, and 2023, respectively. The goodwill impairment during all periods was related to reporting units within the Technology & Shopping reportable segment. Refer to Note 8 — Goodwill and Intangible Assets to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details.

Interest expense, net. Interest expense is generated primarily from interest due on outstanding debt, partially offset by interest income generated from interest earned on cash, cash equivalents, and investments. Interest expense, net decreasedincreased during the year ended December 31, 20242025 compared to the prior period primarily due to the absencelower frominterest theincome 2024as resultsa result of a non-recurringdecline $7.7in millioncash ofequivalents during the period and a reduction in interest expense related to the 1.75% Convertible Notes at a rate of 0.50% per annum recorded in the prior period. See Note 9 — Debt to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details.rates.

Loss on sale of business.businesses. Loss on sale of businesses during the year ended December 31, 2025 represents the loss on sale of our video game publishing business within the Technology & Shopping reportable segment. Loss on sale of businesses during the year ended December 31, 2024 represents the loss on disposal of an international business in the Technology & Shopping reportable segment.

Loss(Gain) loss on investments, net. LossGain (loss) on investments, net is generated from realized and unrealized gains or losses from investments in equity and debt securities. Gain on investments, net recorded during the year ended December 31, 2025 related to the disposition of the minority equity ownership interest in OpenEvidence (formerly known as Xyla) and the sale of an immaterial equity method investment. Loss on investment, net recorded induring the year ended December 31, 2024 andrelated 2023 includesto the change in the fair value of the Company’s investment in Consensus common stock prior to the disposition of the investment and the results of the disposition of the Consensus common stock, which occurredstock during the second quarter of 2024.

Other income (loss), net. Other income (loss), net is generated primarily from miscellaneous items and gains or losses on foreign currency. The change was primarily attributable to a reversal of a reserve established in connection with deferred consideration from a buyer of a previously disposed business during 2024 and changes in gains or losses on foreign currency.

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 basesbasis 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.

As of December 31, 2024,2025, the Company had federal net operating loss carryforwards (“NOLs”) of $3.2$27.1 million, after considering substantial restrictions on the utilization of these NOLs due to “ownership changes”, as defined in the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Company estimates that all of the above-mentioned federal NOLs will be available for use before their expiration. $3.2$2.0 million of the NOLs expire through the year 2031 with the remainder able to be carried forward indefinitely, depending on the year the loss was incurred. Additionally, the Company had tax-effected NOLs, net of valuation allowance of $1.7 million for foreign tax jurisdictions and $5.5 million for state tax jurisdictions.

The change in the annual effective income tax rate in 20242025 compared to the prior period was primarily attributable to the following:

1.a1.$17.6 largermillion goodwill impairment recognized for book purposes during 20242025 as compared to 2023.$85.3 Formillion bothin years,2024. sinceSince the impairment related to excess financial statement goodwill with no tax basis, no corresponding tax benefits were recognized.recognized resulting in a disproportionate effective income tax rate for both years;

IncomeEquity Method Investment (lossLoss) income from equity method investment, net of tax. Income(Loss) (loss)income from equity method investment was primarily generatedrelated fromto the investment in the OCV Fund I, LP (the “OCV Fund”) for which the Company receives annual audited financial statements. The investment in the OCV Fund is presented net of tax. The Company recognizes its share of net earnings or losses relating to the investment in the OCV Fund on a one-quarter lag due to the timing and availability of financial information from the OCV Fund. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

OurThe businessesCompany’s reportable segments are based on the organizational structure used by management for making operating and investment decisions and for assessing performanceperformance. The Company has five reportable segments: (i) Technology & Shopping, (ii) Gaming & Entertainment, (iii) Health & Wellness, (iv) Connectivity, and (v) Cybersecurity & Martech. Reportable segment results presented below are exclusive ofexclude inter-segment revenues and expenses.

Technology & Shopping’s revenues of $330.6$356.6 million in 20232025 decreased $54.4$5.3 million, or 14.1%,1.5%, compared to 20222024 primarily due to a $43.8$13.9 million decrease in other revenues due to lower revenue from our video game publishing business related to the timing of game releases, partially offset by a $5.3 million increase in advertising and performance marketing revenues and a $8.8$3.3 million decreaseincrease in othersubscription and licensing revenues. The decreaseincrease in advertising and performance marketing revenues was due primarily due to an $18.7 million increase in our Technology business, partially offset by a $29.9$13.4 million decrease in revenuesour withinShopping business. The increase in the technologyTechnology business andrevenue was driven by an increase of $34.4 million related to businesses acquired, partially offset by a $13.9decline of $15.7 million decreasein other lines of business. The decline in revenuesrevenue withinwas highest in the shoppingCompany’s business.fourth quarter of 2025 when Technology & Shopping’s revenues decreased $24.0 million, or 18%, driven by continued search rank volatility and weakness during the holiday season.

There has not been a material change in our risk factors since the filing of our Annual Report on Form 10-K for the year ended December 31, 2025, except for the risk factor set forth below.2025.

Ziff Davis, Inc. was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure. Ziff Davis, Inc., together with its subsidiaries (“Ziff Davis”, “the Company”, “our”, “us” or “we”), is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, shopping, gaming and entertainment, health and wellness, connectivity, cybersecurity, and martech. Our business specializes in the technology, shopping, gaming and entertainment, healthcare, and connectivityhealthcare markets, offering content, tools, and services to consumers and businesses and provides internet-delivered cloud-based services to consumers and businesses including cybersecurity, privacy, and marketing technology.

Subscription and Licensing - We provide cloud-based subscription services and generate “fixed” subscription revenues for customer subscriptions and, to a lesser extent, “variable” usage revenues generated from actual usage by our subscribers. We offer subscription and licensing services to businesses, which offer up-to-date insights into global fixed broadband and mobile performance data, and we offerincluding subscription packages to consumers through the Lose It! weight loss app and through Humble Bundle’s digital subscriptions and storefront for video games, ebooks, and software. We also generate revenue from the sale of perpetual software licenses, related software support, and maintenance used in conjunction with software and other related services. We license our proprietary technology, data, and intellectual property to third parties for various purposes.

Other - Other revenues primarily include those from online course revenuescourses and revenues from a customer acquisition platform for subscription services companies.

We use certain metrics to generally assess the operational and financial performance of our businesses. These metrics are described in further detail below and are used by management in managing or monitoring the performance of each reportable segment when the respective revenuesrevenue category is significant to the revenues of the reportable segment overall. For advertising and performance marketing revenues, these metrics are used for the Technology & Shopping, Gaming & Entertainment, and Health & Wellness reportable segments. For subscription and licensing revenues, these metrics are used for the Gaming & Entertainment, Health & Wellness, and Cybersecurity & Martech reportable segments. Since all revenues are not reflected in these metrics, management does not use these metrics on a consolidated basis to evaluate performance, but rather uses them on a reportable segment basis as shown further below.

The following table sets forth certain key operating metrics for the advertising and performance marketing revenues based on the reportable segment for the three months ended MarchJune 31,30, 2026 and 2025.

(2) Excludes customers that generated less than $2,500 in the quarter.quarter and those of certain newly acquired businesses.

Subscription and Licensing - For our subscription and licensing revenues, management has identified the number of customers and average quarterly revenue per customer as relevant to investors’ and others’ assessment of our financial condition and results of operations. We believe that the number of customers that we serve is an indicator of our customer retention and growth. We believe the average monthlyquarterly revenue per customer provides insights that contribute to certain of our business planning decisions. Due to the nature of certain of the Company’s services, changes in our customer base are expected and do not have significant financial implications for the Company as the Company generally does not have significant upfront customer acquisition costs for these customers.

The following table sets forth certain key operating metrics for subscription and licensing revenues based on the reportable segment for the three months ended MarchJune 31,30, 2026 and 2025.

(2) The metric includes the sale of perpetual software licenses, when applicable, revenue for which is recorded at a point-inpoint in time rather than over-time.

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. Our critical accounting policies are described in our 2025 Annual Report on Form 10-K filed with the SEC on February 24, 2026. During the threesix months ended MarchJune 31,30, 2026, there were no significant changes in our critical accounting policies and estimates. See Note 1 — Basis of Presentation and Overview in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional description of significant accounting policies of the Company. As a result of certain developments in one reporting unit within the Health & Wellness reportable segment during the three and six months ended June 30, 2026, the Company performed a quantitative impairment test described further below.

TheDuring Companythe teststhree goodwilland forsix impairmentmonths annuallyended orJune more30, frequently if2026, the Company believes indicators of impairment exist. The Company assessed current economic indicators, including changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, among others, to determine if there would beperformed a significant decline to thequantitative fair value oftest on one reporting unit within the Health & Wellness reportable segment, following a particularperiod of declining results and reductions in forecasted revenue and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) in the reporting unit.unit Followingduring the second quarter of 2026. Based on the quantitative fair value test, the carrying value exceeded its fair value, and the Company recorded an impairment of approximately $54.8 million during the three and six months ended June 30, 2026. In addition, following impairment at one reporting unit within the Cybersecurity & Martech reportable segment during the year ended December 31, 2025, there was no excess of fair value over the carrying value at that reporting unit. SoThus, any further decrease in estimated fair value ofat thisthese reporting unitunits greater than any decrease in the carrying value at these reporting units will result in an additional impairment charge to goodwill. Goodwill at thisthese two reporting unitunits was $159.8$196.3 million as of MarchJune 31,30, 2026. There were no other reporting units with less than 10% excess fair value over carrying value as of the most recent evaluation that may be at risk of impairment as of MarchJune 31,30, 2026. Changes in market conditions, and key assumptions made in future quantitative assessments, including expected cash flowsflows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026

We expect acquisitions to remain an important component of our strategy and use of capital across our Company; however, for a number of reasons, including macroeconomic conditions, in a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods. Moreover, future acquisitions of businesses with different business models,models may impact overall operating profit margins. From time to time, the Company may take steps to reduce investment in one or more of its business activities. In the past, we have divested certain businesses that we determined were no longer consistent with the Company’s focus or that no longer aligned with the current or expected business performance of the Company’s other businesses. Our plannedThe divestiture of the Connectivity business is intended to support our ongoing effort to maximize value for the Company’s shareholders.

Our revenues consist of revenues from (i) advertising and performance marketing revenues, which are earned from the delivery of advertising services, marketing, performance marketing, and production services, and (ii) subscription and licensing revenues, which are earned through the granting of access to, or delivery of, certain data products or services to customers, usage-based fees, and by reselling various third-party solutions, primarily through the Company’s email security line of business. Subscription and licensing revenues primarily consist of revenues from “fixed” customer subscription and licensing revenues and “variable” revenues generated from actual usage of our services.

Our revenues decreased during the three months ended MarchJune 31,30, 2026 compared to the prior period primarily due to aan $8.8$11.5 million decrease in advertising and performance marketing revenues. This decrease was driven primarily by a $11.1$5.7 million decrease in ourthe Technology & Shopping reportable segment, partially offset by a $1.3$3.1 million increasedecrease in the Gaming & Entertainment reportable segmentsegment, and $1.0a $2.7 million increasedecrease in ourthe Health & Wellness reportable segment. Subscription and licensing revenues decreased $0.2 million. Other revenues increased $1.9$3.7 million compared to the prior year period due primarily to a $1.5$3.0 million increase in our Gaming & Entertainment reportable segment. Other revenues increased $1.8 million compared to the prior year period due primarily to a $2.7 million increase in our Cybersecurity & Martech reportable segment, partially offset by a $0.9 million decrease in our Health & Wellness reportable segment. Included in revenue during the three months ended MarchJune 31,30, 2026 waswere $11.1$7.1 million of incremental revenues contributed by businesses acquired during the first half of 2026 and the full year 2025.

Direct costs represent the Company’s cost of revenues and primarily include costs associated with compensation for personnel directly involved in revenue generation, content fees, production costs, royalty fees, hosting and licensing costs, and processing fees. The increase in direct costs for the three months ended MarchJune 31,30, 2026 compared to the prior period was primarily due to a $1.5 million increase in campaign fulfillment costs related to a business acquired in 2025, a $1.5 million increase in partner payments, and a $1.4$2.0 million increase in cloud computing, software, and other related expenses, a $1.0 million increase in campaign fulfillment costs related primarily to a business acquired in 2025, and a $0.7 million increase in salaries, benefits, and other employee expenses. The increase in direct costs for the six months ended June 30, 2026 compared to the prior period was primarily due to a $3.4 million increase in cloud computing, software, and other related expenses, a $2.1 million increase in campaign fulfillment costs related primarily to a business acquired in 2025, a $2.2 million increase in partner payments, and a $1.0 million increase in salaries, benefits, and other employee expenses.

Sales and marketing costs consist primarily of internet-based advertising, sales and marketing, personnel costs, and other business development-related expenses. Our internet-based advertising relationships consist primarily of fixed cost and performance-based (cost-per-impression, cost-per-click, and cost-per-acquisition) advertising relationships with an array of online service providers. The increasedecrease in sales and marketing expenses during the three months ended MarchJune 31,30, 2026 compared to the prior period was primarily due to a $4.5$1.9 million decrease in professional and third-party services, a $1.4 million decrease in advertising and marketing related expenses, and a $0.9 million decrease in cloud computing, software, and other related expenses. The decrease in sales and marketing expenses for the six months ended June 30, 2026 compared to the prior period was primarily due to a $3.6 million decrease in professional and third-party services and a $2.7 million decrease in advertising and marketing related expenses, partially offset by a $4.4 million increase in salaries, benefits, and other employee expenses as a result of prior year acquisitions, partially offset by a $1.6 million decrease in professional and third-party services.expenses.

Research, development, and engineering costs consist primarily of salaries, benefits, and other employee expenses. The decreaseincrease in research, development, and engineering costs for the three months ended MarchJune 31,30, 2026, compared to the prior period was primarily due to a $0.4$0.7 million increase in professional and other third-party services, partially offset by a $0.6 million decrease in salaries, benefits, and other employee expenses,expenses. partiallyResearch, offset by a $0.2 million increase in professionaldevelopment, and otherengineering third-partycosts services.for the six months ended June 30, 2026 compared to the prior period remained consistent.

General, administrative, and other related costs consist primarily of salaries, benefits, and other employee expenses including share-based compensation and severance, changes in the fair value associated with contingent consideration, bad debt expense, professional fees, and insurance costs. The increasedecrease in general, administrative, and other related costs for the three months ended MarchJune 31,30, 2026 compared to the prior period was primarily due to a $3.3$4.2 million decline in indirect tax expense driven by a reduction in certain reserves due to the expiration of certain statutes of limitations and a $0.8 million decrease in salaries, benefits, and other employee expenses, partially offset by a $2.7 million increase in professional and other third-party services.services and a $1.8 million long-lived asset impairment. The increase in general, administrative, and other related costs for the six months ended June 30, 2026 compared to the prior period was primarily due to a $5.4 million increase in professional and other third-party services and a $1.8 million long-lived asset impairment, partially offset by the $4.2 million decline in indirect tax expense and a $1.5 million decrease in salaries, benefits, and other employee expenses.

Depreciation and amortization costs consist of depreciation related to property and equipment, including internally developed software, as well as amortization of intangible assets recorded in connection with business acquisitions, and other intangible assets of the Company. The decrease in depreciation and amortization for the three months ended MarchJune 31,30, 2026 compared to the prior period was primarily due to a $4.2$3.9 million decrease in amortization expense due to certain intangible assets being in run-off state and having a greater amortization expense earlier in life. The decrease in depreciation and amortization for the six months ended June 30, 2026 compared to the prior period was primarily due to an $8.1 million decrease in amortization expense due to certain intangible assets being in run-off state and having a greater amortization expense earlier in life.

The following table represents the components of non-operating income and expenses for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Interest expense, net. Interest expense is generated primarily from interest due on outstanding debt, partially offset by interest income generated from interest earned on cash, cash equivalents, and investments. Interest expense, net increaseddecreased during the three months ended MarchJune 31,30, 2026 compared to the prior periods primarily due to lowerhigher interest income on investments as a result of aan declineincrease in cash equivalents andas a reductionresult inof interestthe rates.sale of Connectivity. Interest expense, net remained consistent during the six months ended June 30, 2026 compared to the prior period.

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

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

Provision for income taxes from continuing operations amounted to income tax expense of $2.6$0.9 million and $3.6income tax benefit of $0.1 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and income tax expense of $3.6 million and $3.5 million for the six months ended June 30, 2026 and 2025, respectively. Our effective tax rate was (80.51.8)% and 53.2%(0.8)% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and (6.6)% and 22.3% for the six months ended June 30, 2026 and 2025, respectively.

The changedecrease in our effective income tax rate to (6.6)% for the threesix months ended MarchJune 31,30, 2026 compared to 22.3% in the prior period was primarily attributable to the following:

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law which, among other things, provided a permanent extension of certain tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025, and modified tax legislation affecting bonus depreciation rules and the tax treatment of research and development expenses and interest deductions. Specifically, the OBBBA provides for 100% bonus depreciation and eliminates the requirement under Internal Revenue Code Section 174 to capitalize and amortize U.S. based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred beginning after 2024. The Company currently does not expect the OBBBA to have a material impact on its effective tax rate but expects these provisions to result in a reduction of current income tax liabilities and an increase in deferred tax liabilities. The Company will continue to assess the implications of the OBBBA and will provide further disclosures in subsequent reporting periods, as necessary.

IncomeEquity Method Investment (Loss) income from equity method investment, net of tax. Income from equity method investmenttax was primarily from the investment in the OCV Fund I, LP (the “OCV Fund”) for which the Company receives annual audited financial statements. The investment in the OCV Fund is presented net of tax. The Company recognizes its share of net earnings or losses relating to the investment in the OCV Fund on a one-quarter lag due to the timing and availability of financial information from the OCV Fund. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

IncomeLoss from equity method investment was $0.1 million, net of tax, for the three months ended June 30, 2026 compared to income from equity method investment of $5.1 million, net of tax, for the three months ended MarchJune 31,30, 2025. Income from equity method investment was $5.0 million, net of tax, for the six months ended June 30, 2026 compared to income from equity method investment of $6.6$11.7 million, net of tax, for the threesix months ended MarchJune 31,30, 2025. The decrease in income from equity method investment, net of tax during the three months ended MarchJune 31,30, 2026 compared to the prior period was primarily due to a decrease in the value of the underlying investments. The decrease in income from equity method investment, net of tax during the six months ended June 30, 2026 compared to the prior period was primarily due to a decrease in the value of the underlying investments.

Net (Lossloss) income from continuing operations

LossNet loss from continuing operations was $0.8$52.2 million for the three months ended MarchJune 31,30, 2026 compared to net income from continuing operations of $9.8$14.3 million for the three months ended MarchJune 31,30, 2025. Net loss from continuing operations was $52.9 million for the six months ended June 30, 2026 compared to net income from continuing operations of $24.1 million for the six months ended June 30, 2025. The decrease in net income from continuing operations during the three and six months ended MarchJune 31,30, 2026 compared to the prior period was driven by the factors discussed above.

Net income from discontinued operations, net of tax was $23.0$676.6 million for the three months ended MarchJune 31,30, 2026 compared to net income from discontinued operations, net of tax of $14.4$12.0 million for the three months ended MarchJune 31,30, 2025. The increase in net income from discontinued operations,operations netwas ofdriven tax duringby the threepre-tax monthsgain ended March 31, 2026 compared toon the prior period was primarily due to a $3.8 million increase in revenues and a $16.0 million increase in income tax benefit related primarily to deferred tax assets recorded upon our classificationsale of Connectivity asof held-for-sale,$860.6 million, partially offset by ahigher $8.8tax expense of $197.4 million increasedue in transaction costs and $2.3 million increase in stock-based compensation relatedprimarily to the dispositiontax impact of the Connectivitygain business.on sale of $200.0 million recorded during the second quarter of 2026.

Net income was $22.3$624.5 million for the three months ended MarchJune 31,30, 2026 compared to net income of $24.2$26.3 million for the three months ended MarchJune 31,30, 2025. Net income was $646.7 million for the six months ended June 30, 2026 compared to net income of $50.6 million for the six months ended June 30, 2025. The decreaseincrease in net income during the three and six months ended MarchJune 31,30, 2026 compared to the prior period was driven by the factors discussed above.

Technology & Shopping’s revenues of $71.2$76.8 million during the three months ended MarchJune 31,30, 2026 decreased $10.5$4.0 million compared to the prior period primarily due to a $11.1$5.7 million decrease in advertising and performance marketing revenues, primarily driven by $4.4$4.1 million and $3.6$3.4 million decreases in advertising and performance marketing revenues in our Technology businessbusinesses and our Shopping business,businesses, respectively, and a $2.6 million decrease in the first party advertising revenues in our Technology business, partially offset by a $0.6$1.0 million increase in subscription and licensing revenues and a $0.7 million increase in other revenues. The decline in revenues during the quarter was driven by traffic pressures impacting affiliate commerce and programmatic display advertising.

HealthTechnology & Wellness’sShopping’s revenues of $86.0$147.9 million during the threesix months ended MarchJune 31,30, 2026 increaseddecreased $0.2$14.6 million compared to the prior period primarily due to a $1.0$16.8 million increasedecrease in advertising and performance marketing revenues, primarily driven by an$11.4 increasemillion inand the$7.2 Healthmillion & Wellness Consumer business due in part to an acquisition in 2025, partially offset by declines in other of our Health & Wellness lines of business. The increasedecreases in advertising and performance marketing revenues wasin our Technology businesses and our Shopping businesses, respectively, partially offset by a $0.9$1.6 million decreaseincrease in subscription and licensing revenues and a $0.7 million increase in other revenues. The decline in revenues during the period was driven by traffic pressures impacting affiliate commerce and programmatic display advertising.