Ziff Davis, Inc. (ZD): A Bull Case Theory

Company Overview - Ziff Davis, Inc. is a New York-based digital media conglomerate operating across five verticals: Technology & Shopping, Gaming & Entertainment, Health & Wellness, Connectivity, and Cybersecurity & Martech [2] - The company generated $1.4 billion in revenue in 2024, with $494 million in Adjusted EBITDAS (35% margin) and $346 million in Adjusted EBITA (25% margin) [2] - Ziff Davis has a market capitalization of $1.31 billion and net debt of $267 million [2] Business Strategy - Under CEO Vivek Shah, Ziff Davis has pursued an acquisitive strategy, completing over 90 acquisitions in 30 years, focusing on high-ROIC, niche digital assets that generate recurring revenues [3] - Approximately 40% of total revenue comes from advertising and subscription/licensing [3] - The company emphasizes disciplined capital allocation, reinvesting free cash flow into acquisitions, opportunistic share repurchases, and maintaining low leverage [3] Financial Performance - Ziff Davis trades at compelling multiples: 2.8x Adjusted EBITDAS, 3.9x Adjusted EBITA, and 5x Adjusted EPS, reflecting a significant discount to intrinsic value [3] - The management's track record of consistent returns on invested capital and aggressive share repurchases suggests the market is undervaluing the business [4] - Organic growth has shown improvement over recent years, and insider buying signals confidence in the company's future [4] Investment Thesis - The investment case for Ziff Davis is supported by strong free cash flow generation, competent management, and potential for value recognition through operational performance or eventual M&A [4] - The stock price has appreciated approximately 10.44% since previous coverage, reinforcing the thesis of undervaluation and high-margin stability [5] - The focus on segment-level performance, ROIC, and long-term acquisitive strategy is central to the company's value proposition [5]