Ziff Davis, Inc. · NASDAQ:ZD
Ziff Davis — J2 Global — Investor Day (March 2020)
88 slides from Ziff Davis's investor day presentation, Mar 4, 2020
Slide 1: Analyst Day Presentation
Analyst Day Presentation March 4, 2020 1
Slide 2: Safe harbor for forward-looking statements
Safe harbor for forward-looking statements Certain statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, particularly those regarding our 2020 Financial Guidance. Such forward-looking statements are subject to num
Slide 3: Risk factors
Risk factors The following factors, among others, could cause our business, prospects, financial condition, operating results and cash flows to be materially adversely affected: • Inability to sustain growth or profitability, and any related impact of U.S. or worldwide economic issues on customer ac
Slide 4: J2 Global
J2 Global Scott Turicchi, President and CFO 4
Slide 5: Agenda
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Agenda 2:00pm Welcome & Financials | Scott Turicchi, President and Chief Financial Officer 2:15pm Cloud Services | Nate Simmons, President, Cloud Services 3:00pm Ziff Davis | Steve Horowitz, President, Ziff Davis 3:45pm Everyd
Slide 6: Investment highlights
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Investment highlights Diversified portfolio of internet brands at the forefront of the shift from analog to digital Highly recurring revenues across advertising and subscription businesses Consistent and sustained revenue and
Slide 7: Exceptional financial performance
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Exceptional financial performance 21% Revenue CAGR 24% average annual ROIC1 FCF / (IEC + Net Debt) ($ in MM USD) ($ in MM USD) $1,372.0 CAGR +21% $1,207.3 25.5% Avg.= 23.8% $1,117.8 31.0% 23.5% 22.6% $874.3 24.1% $720.8 20.9%
Slide 8: Two strong segments
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Two strong segments Digital Media Cloud Services Financial Overview Financial Overview Revenue Revenue ($ in MM USD) ($ in MM USD) CAGR 9% 3% CAGR 3 $609 $710 $567 $598 $662 $539 52% $579 48% of Total $503 of Total Revenue $43
Slide 9: 2020 FY guidance
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System 2020 FY guidance Adjusted Adjusted non- Revenues EBITDA 1,2 GAAP EPS 1,2 $1,465MM - $575MM - $7.36 - $7.66 $1,505MM $595MM 1. Figures are adjusted non-GAAP 2. Adjusted earnings per diluted share excludes share-based compensati
Slide 10: Significant capacity for acquisitions in 2020
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Significant capacity for acquisitions in 2020 $1B+ of ‘dry powder’ from three sources Balance sheet 2020 FCF Revolving line of credit Cash on hand at year end Cash from ongoing 2020 Debt instrument leveraged for operations acq
Slide 11: Cloud Services
Cloud Services Nate Simmons, President 11
Slide 12: Introductions
Introductions Experience: • Symantec (NortonLifeLock) • Time Inc. • Warner Media • McKinsey & Company Expertise: • Digital security and privacy • Subscription revenue growth • eCommerce Nate Simmons • M&A / Integration President, Cloud Services 12
Slide 13: J2 Cloud Services provides market-leading software and services
J2 Cloud Services provides market-leading software and services that enable people and businesses to be productive and safe in the digital world 13
Slide 14: Investment highlights
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Investment highlights • Market-leading security, communications, and marketing solutions for businesses and consumers • Strong financial performance with >80% recurring revenue from subscription • Successful acquisitions expan
Slide 15: Successful expansion into multiple cloud-based markets
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Successful expansion into multiple cloud-based markets From Online Fax to Security and Privacy 2013 2015 2017 2019 2010 2014 2016 2018 15
Slide 16: Strong positions in attractive markets
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Strong positions in attractive markets Markets Example brands Description 2019 Revenue1 Protecting businesses and consumers from disruption and loss due to cyber threats • Advanced email and endpoint security and threat intell
Slide 17: Market-leading products: Security and Privacy
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Market-leading products: Security and Privacy Highly rated by customers, partners, and 3rd party reviews and testing Multiple Top Product and “Best VPN out there. No fine J2 is the largest Veeam® First major cloud fax provider
Slide 18: Strong financial performance with >80% recurring subscription revenue
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Strong financial performance with >80% recurring subscription revenue 9% Revenue CAGR Cloud Services revenue composition ($ in MM USD) (2019) Fixed-recurring subscription CAGR +9% $662 $598 $567 $579 $503 Usage-based $430 83%
Slide 19: Successful acquisitions expand product offerings and drive profitable growth
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Successful acquisitions expand product offerings and drive profitable growth Investment thesis: SMB Enablement Date of Total 2019 EBITDA Integration and Acquisition Business description purchase acquisition price Contribution
Slide 20: Building leadership positions and growth engines
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Building leadership positions and growth engines based on Security and Privacy value propositions Secure document Cybersecurity and data Privacy solutions transmission protection Enabling consumers and For healthcare and other
Slide 21: Secure document transmission: Growing in healthcare and compliance verticals
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Secure document transmission: Growing in healthcare and other compliance verticals Global Online Fax market1 Strategy: Win share from server-based providers with Cloud- and server-based cloud-based secure document delivery sol
Slide 22: Cybersecurity and data protection: Aligning portfolio to SMB needs
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Cybersecurity and data protection: Aligning our portfolio to deliver against SMB customer needs ‘Essential / very important’ security services planned J2 offerings are aligned to SMB security priorities, for purchase in next 2
Slide 23: Privacy solutions: New business unit
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Privacy solutions: New business unit 76% of consumers are “more alarmed than ever” about their privacy and 87% want to do more to protect it1 REVENUE 2019 ACQUISITION ACCELERATION FIRST 9 MONTHS . . . Portfolio of VPN services
Slide 24: Privacy solutions: Developing the future product suite
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Privacy 3 solutions: Developing the future product suite Solution Private Secure devices Secure file sharing Private phone #s Under evaluation connections (VPN) & Storage (examples) Description Defends against Secures devices
Slide 25: Experienced senior management team
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Experienced senior management team Arjen Berendsen Ron Burr Paula Croutch Lynn Johnson GM, Security GM, Voice CFO, Cloud Services HR Director Easynet Global Services PADI, CallFire, LRN, NetZero eHarmony, Andersen Cast & Crew,
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Slide 27: Ziff Davis
Ziff Davis Steve Horowitz, President 27
Slide 28: Introductions
Introductions Experience: • Bankrate • AOL • Yahoo • GeoCities • Bertelsmann • Turner Broadcasting Expertise: • eCommerce (affiliate and direct) • Marketplaces (online classifieds and personal finance) Steve Horowitz • Consumer and business subscription President, Ziff Davis services • M&A 28
Slide 29: Ziff Davis is a tech company focused on helping people decide
Ziff Davis is a tech company intently focused on helping people research, decide, and act on important decisions in their personal and professional lives 29
Slide 30: Fundamental change in foundation
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Fundamental change in foundation From impression-based, CPM/RFP-dependent to customer-centric, performance-based, “always on” budgets 2014 2018 2013 2015 2017 2019 30
Slide 31: Scale positions in attractive markets
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Scale positions in attractive markets Markets Example brands Description 2019 Revenue • Brand and editorial authority across consumer, SMB and B2B tech vertical Tech • Decision-based content, delivering consumers vs. impressio
Slide 32: Financial overview: Strong revenue growth
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Financial overview: Strong revenue growth 24% Revenue CAGR In 2019, 73% of Ziff Davis revenues were from non- ($ in MM USD) CPM-based sources $499 2014 2019 $434 CAGR +24% 27% 31% $341 5% 64% $284 $216 31% $168 42% Display/Vid
Slide 33: Ziff Davis: The most financially diversified at-scale tech organization
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Ziff Davis: The most financially diversified at-scale tech organization Audience Assets Engagement Yield 500MM+ 500K+ 23B+ 29MM+ Monthly visits Pieces of content Views / year Leads generated / year published / year 90MM+ 1MM+
Slide 34: Leader in tech: Brands that deliver customers, not just impressions
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Leader in tech: Brands that deliver customers, not just impressions Example content: Authoritative editorial content that instils confidence for important decisions Prestigious brands with decades of user and algorithm trust P
Slide 35: Case study: Monetizing intent with supply chain ownership
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Case study: Monetizing intent with supply chain ownership and performance-based demand delivery Organic Intent: SEO | | Email | Social Supply chain ownership “How to clean up Offers.com: “Best Black “Best Friday deals” “Fastes
Slide 36: Case study: Event-based commerce strategy is a success
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Case study: Event-based commerce strategy is a success Ziff Davis combined Offers.com infrastructure with three holiday deals sites via micro-transactions Total 2019 EBITDA Target Transaction date Description Growth strategy p
Slide 37: The leader in gaming: Brands that drive awareness and transactions
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System The leader in gaming: Brands that drive awareness and transactions—from indie to AAA, from console to PC • 12MM lifetime paid customers across • 257MM users / month1 subscriptions, store, and digital bundles • #1 in gaming ind
Slide 38: Case study: Humble Bundle publishing propels the flywheel
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Case study: Humble Bundle publishing propels the long- term business flywheel Humble Publishing + Structure + Retail Sales value • Indie focus • HB published games sold • Finishing funds investment in HB store, Steam, etc. Sub
Slide 39: Case study: IGN owns the valuable gaming audience
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Case study: IGN owns the valuable gaming audience Global content powerhouse: IGN has best-in-class social reach: 41MM • Published on 25+ owned & distributed platforms followers1 • 148MM users view IGN social content / month1 •
Slide 40: At the center of the broadband economy
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System At the center of the broadband economy: Cellular to WiFi, residential to business, planning to measurement Cellular DAS 5G WiFi Fixed • Mobile data • Distributed • Global 5G infra- • WiFi expected to • Fixed wireless traffic u
Slide 41: ZD's brands span the broadband services value chain
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System At the center of the broadband economy: ZD’s brands span the broadband services value chain Brand Description Design/Planning Measurement Troubleshooting • Global leader in solutions for enterprise wireless network design and
Slide 42: Growth opportunities: Five core investment tenets
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Growth opportunities: Five core investment tenets Reviews, Rewards, Surveys / Research Crowdsourced Attribution M&A Ratings • Authoritative • Already a proven • Double-down on a • Privacy compliance • Aperture for M&A brands a
Slide 43: Experienced senior management team
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Experienced senior management team Mike Finnerty Shannon Hogan Geoff Inns Richard Jalichandra Jeff O’Mara GM, Ziff Media Group HR Director EVP, Global Revenue Ops GM, Global B2B GM, Ekahau The Weather Company, Bay Area News Gr
Slide 44: Investment highlights
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Investment highlights • Growth-minded, diversified operating model across the Ziff Davis Division AND within each Business Unit • More than 2x revenue and EBITDA dollar growth over the past five years • Deliver customers and a
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Slide 46: Everyday Health Group
Everyday Health Group Dan Stone, President 46
Slide 47: Introductions
Introductions Experience: • AccentHealth • Scient; Imaginova • CNN.com; IAB • Turner Broadcasting; TBS Int’l. • Amsterdam Pacific; Kidder, Peabody • Booz, Allen & Hamilton Expertise: • Healthcare media • Digital media/eCommerce Dan Stone • Cable TV Networks • Strategic Planning/Corporate Finance Pre
Slide 48: Mission
Everyday Health Group Mission To drive better clinical and health outcomes through decision- making informed by highly relevant information, data and analytics Approach To empower healthcare professionals and consumers with trusted content and services delivered through Everyday Health Group’s world
Slide 49: Successful transformation from Everyday Health, Inc. to EHG Division
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Successful transformation from Everyday Health, Inc. (EVDY) to the Everyday Health Group (EHG) Division of J2 Publicly traded Everyday Health Group (EHG) Division of J2 (EVDY) Acquisitions Acquired by J2 Global Q2 Q3 Q4 Q1 Q2
Slide 50: Financial snapshot: EHG is growing with diversified revenue streams
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Financial snapshot: EHG is growing with diversified revenue streams Revenue growing 11% CAGR Diversified revenue streams ($ in MM USD) (2019) $211.3 Impression-based CAGR +11% Action-based advertising2 advertising $171.0 $175.
Slide 51: Leading brands across attractive healthcare markets
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Leading brands across attractive healthcare markets Markets Example brands Description 2019 Revenue • Condition-specific consumer/patient-centric media serving primarily pharmaceutical advertisers Consumer $76MM • Mayo-branded
Slide 52: Powerful marketing platforms
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Powerful marketing platforms Consumer Professional Pregnancy & Provider Services Parenting • 49MM Monthly • 830K US Physician • #1 and #2 Pregnancy • 1.2MM cumulative Unique Visitors Digital reach apps job-seeking HCPs • 30MM
Slide 53: Defensible competitive position with sustainable barriers to entry
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Defensible competitive position with sustainable barriers to entry Markets Brands Competitive positioning Barriers to entry • #3 Largest consumer digital network • Significant investment over many years in SEO-friendly, author
Slide 54: Everyday Health Group offers a broad set of market solutions
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Everyday Health Group offers a broad set of market solutions Pregnancy & Peer Companies Ownership Consumer Professional Parenting Provider Services • J2 Global • Public tender 11/16 ü ü ü ü • Internet Brands / KKR ü ü ü • Publ
Slide 55: Favorable healthcare and pharma market dynamics
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Favorable healthcare and pharma market dynamics • Aging population and rise of the Millennials—Patients and Doctors Demographics • The continued consumerization of healthcare, combining healthcare and self-care • Rise in high-
Slide 56: Favorable healthcare and pharma market dynamics
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Favorable healthcare and pharma market dynamics US Healthcare expenditures are at 18% of GDP and growing1 Global pharmaceutical growth is accelerating with aging population ($ in Billions USD) $3,675 and demand for more comple
Slide 57: Favorable healthcare and pharma market dynamics
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Favorable healthcare and pharma market dynamics Digital ad spend in the healthcare vertical has trailed other verticals1 Share of global healthcare digital spend expected to increase2 (Top ad-spend industries in 2018) 49% 46%
Slide 58: Attractive growth prospects across multiple vectors
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Attractive growth prospects across multiple vectors Patients / Employees Connections • Connecting Patients with Services & Tools • Connecting Patients with Providers • Connecting & Supporting Providers • Connecting Employers/P
Slide 59: EHG sits at the nexus of Healthcare Digital Media and HCIT
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Everyday Health Group sits at the nexus of Healthcare Digital Media and Healthcare IT (HCIT) Healthcare Healthcare IT Digital Media Key = Public companies 59
Slide 60: M&A case study: Provider Services
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System M&A case study: Provider Services Date of Total purchase 2019 EBITDA Target Business description Growth strategy acquisition price Contribution Shrink-to-grow, i.e., deeper The leading recruitment and 10/17 penetration of high
Slide 61: Attractive growth prospects along the Patient Journey
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Attractive growth prospects along the Patient Journey Online condition E-Visit research Select Symptom/ provider/ Appointment Need method follow-up Off/online Book Point- doctor research appointment of-care Condition/ Referral
Slide 62: Attractive growth prospects along the Patient Journey
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Attractive growth prospects along the Patient Journey Consumers prefer the internet for gathering provider info1 While the Telemedicine market is poised to explode2 (top 5 sources n=1K) (US Telemedicine market $ in Billions US
Slide 63: Experienced senior management team
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Experienced senior management team Jeff Blatt Heidi Cho Nan-Kirsten Forte EVP/GM, Professional EVP/GM, Pregnancy & Parenting EVP/GM, Consumer Amazon, Time Inc. Rodale, Hearst, Hachette WebMD, Healthline Media, HealthTap Brian
Slide 64: Investment highlights
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Investment highlights • Successful financial and business evolution since November 2016 EVDY acquisition • Strong growth trajectory and diversified revenue streams • Powerful and differentiated Consumer/Patient and Provider en
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Slide 66: J2 Acquisition System
J2 Acquisition System Sean Alford, SVP Corporate Development 66
Slide 67: Introductions
Introductions Experience • Proskauer Rose • Comcast / NBCUniversal Expertise: • Mergers & Acquisitions • Joint Ventures and Strategic Investments • Technology, Media & Telecommunications • Corporate Law Sean Alford SVP, Corporate Development 67
Slide 68: A proven platform for M&A
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System A proven platform for M&A J2 Global revenue and select acquisitions ($ in MM USD) $1,500 Everyday Health Ziff Davis Cloud Services $1,000 $500 Since 2010: • 150+ Acquisitions Revenue • $2.5B+ Allocated to M&A 2010 2011 2012 20
Slide 69: With a track record of success
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System With a track record of success J2 adds value post-close that drives down purchase price multiples over time. A playbook of synergy and optimization translates to attractive purchase prices relative to forward EBITDA Contributi
Slide 70: The J2 Global M&A Toolkit
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System The J2 Global M&A Toolkit Flywheel Advantage Access to capital, operating talent, sector expertise and transaction expertise creates a virtuous cycle Flywheel Sourcing Sourcing Network Advantage Network Culture of M&A and comp
Slide 71: The J2 Global Flywheel Advantage
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System The J2 Global Flywheel Advantage Small Companies Large Enterprises Private Equity J2 Global Transactional Operational Transactional Operational Transactional Operational Transactional Operational Expertise Expertise Expertise
Slide 72: J2 Sourcing Program: An institutional priority
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System J2 Sourcing Program: An institutional priority J2 Global Parent Ziff Davis Cloud Services Themes: • New categories at scale Themes: • Value-enhancing transactions Themes: • Technology & culture publishing • SMBE enablement • O
Slide 73: Disciplined Deal-Making: Fundamentals-focused, value-oriented
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System Disciplined Deal-Making: Fundamentals-focused, value-oriented Focus on fundamental metrics Free Cash Flow Build bottom-up, Identify cost-saving (IRR, ROIC, Payback Period) is king line-by-line opportunities Prioritize high-mar
Slide 74: J2's Programmatic Process: Systematic review, selection and execution
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System J2’s Programmatic Process: Systematic review, selection and execution Criteria to Advance: Corporate Development Sponsor (CD) Watchlist Resource Intensity: Very low High Low el Criteria to Advance: CD, Operating Sponsor (OS) I
Slide 75: 2019 M&A Summary
J2 Global Cloud Services Ziff Davis Everyday Health J2 Acquisition System 2019 M&A Summary ~$435MM 12 9 400+ Cash Spend Acquisitions Proprietary Opportunities Transactions Reviewed 8 <$1MM >$200MM Subsectors / Smallest Largest Business Units Transaction Transaction 75
Slide 76: J2 Global
GLOBAL
Slide 77: Fireside Chat
Fireside Chat Vivek Shah, CEO | J2 Global Dan Ives, Managing Director, Equity Research | Wedbush Securities 77
Slide 78: J2 Global
J2 GLOBAL
Slide 79: Q&A
Q&A J2 Global Team 79
Slide 80: J2 Global
J2 GLOBAL
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Slide 82: Supplemental Information
Supplemental Information 82
Slide 83: Return on Invested Capital (ROIC) calculation
Return on Invested Capital (ROIC) calculation 1. Cumulative spend based on PPE, purchase of acquisitions (net of proceeds from sale of businesses), purchase of intangibles and deferred payments for acquisitions from Statement of Cash Flow 2. Adjusted EBITDA is defined as net income plus interest and
Slide 84: FY 2019 Reconciliation of GAAP to Adjusted EBITDA
FY 2019 Reconciliation of GAAP to Adjusted EBITDA1 ($ in MM USD) NOTE 1: Table above excludes certain intercompany allocations NOTE 2: The table above is impacted by certain expenses associated with the Corporate entity that were allocated to the Cloud Services business and the Digital Media busines
Slide 85: FY 2018 Reconciliation of GAAP to Adjusted EBITDA
FY 2018 Reconciliation of GAAP to Adjusted EBITDA1 ($ in MM USD) NOTE 1: Table above excludes certain intercompany allocations NOTE 2: The table above is impacted by certain expenses associated with the Corporate entity that were allocated to the Cloud Services business and Digital Media business as
Slide 86: Reconciliation of GAAP to Adjusted EBITDA by Segment
Reconciliation of GAAP to Adjusted EBITDA by Segment ($ in MM USD) 1. Figures are adjusted non-GAAP 86
Slide 87: GAAP Reconciliation: Free Cash Flow
GAAP Reconciliation: Free Cash Flow1,2 1. Free Cash Flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, less patent settlement, plus excess tax benefits (deficits) from share based compensation, plus IRS settlement, plus contingent considera
Slide 88: GAAP Reconciliation: Adjusted EBITDA
GAAP Reconciliation: Adjusted EBITDA1, 2 1. Adjusted EBITDA is defined as net income plus interest and other expense, net; income tax expense; depreciation and amortization and the items used to reconcile GAAP to Adjusted Non-GAAP EPS. Adjusted EBITDA amounts are not meant as a substitute for GAAP,