Summary of Ziff Davis (ZD) FY Conference Call - May 14, 2025 Company Overview - Ziff Davis has built a portfolio through systematic acquisitions and growth in digital media and internet businesses, focusing on value creation across five vertical categories [4][14] - The company aims for organic growth and growth through acquisitions, with a diversified business model including advertising, subscription, and licensing revenue [4] Financial Performance - Reported a revenue growth of 5% in the quarter, with the Digital Media segment growing 9% [5] - Reaffirmed guidance for mid-single-digit growth across revenue, EBITDA, and EPS for the year [5] - Strong M&A activity expected to continue, with a healthy balance sheet [6] Advertising and Market Trends - Advertising revenues increased by 12% in Q1, with strong performance across tech, shopping, health, and gaming categories [7][11] - Health and wellness sector driven by a strong FDA drug pipeline, while gaming benefits from upcoming console releases [8][9] - Concerns about tariffs affecting the tech and shopping categories, but no immediate signs of impact observed [10][11] Segment Analysis Technology and Shopping - The CNET Group and RetailMeNot segment grew 14% in revenue and 44% in adjusted EBITDA, driven by organic growth and margin expansion [21] - B2B businesses have been a drag on growth but are now profitable [22] Gaming and Entertainment - IGN Entertainment segment grew mid-single digits, with strong advertising growth but some challenges in subscription offerings [26][28] - Anticipated growth from new gaming IP and streaming platforms [30] Health and Wellness - Everyday Health Group showed mid to high single-digit revenue growth and double-digit EBITDA growth, benefiting from a favorable pharma advertising environment [32][34] Connectivity - Ookla segment maintained flat revenue despite a 25% decline in wireless access point sales industry-wide, with expectations for growth as Wi-Fi 7 is introduced [41][42] Cybersecurity and Martech - This segment declined due to tough year-over-year comparisons, but there is optimism for sequential growth throughout the year [44][46] AI and Intellectual Property - Ziff Davis filed a lawsuit against OpenAI for unauthorized use of its content, emphasizing the need for compensation for IP usage [47][49] - 35% of the company's revenues are web traffic-based, with 40% of that from search, indicating a diversified revenue model [51][52] M&A Strategy - The company is focused on tuck-in acquisitions that are synergistic with existing businesses, with a robust pipeline across all segments [63][64] - Historical targets include 20% cash-on-cash returns and maintaining a gross debt to EBITDA ratio of three times [66] Market Outlook - The company is optimistic about returning to organic growth and a consistent M&A cadence, with all segments positioned for potential growth [76][78] - The management believes that the current market valuation does not reflect the company's performance and potential [68][70] Conclusion - Ziff Davis is positioned for growth across its diversified portfolio, with strong financial performance and a proactive approach to M&A and market challenges [80][81]

Financial Data and Key Metrics Changes - Q1 2025 revenues were $328.6 million, reflecting a growth of 4.5% compared to $314.5 million in Q1 2024 [20] - Adjusted EBITDA for Q1 2025 was $100.2 million, slightly down from $100.8 million in the prior year, with an adjusted EBITDA margin of 30.5% [20][21] - Adjusted diluted EPS for Q1 2025 was $1.14, impacted by higher net interest expenses and depreciation [21] Business Line Data and Key Metrics Changes - Tech and Shopping segment revenues grew nearly 18%, with adjusted EBITDA increasing nearly 44% [8] - Gaming and Entertainment revenues grew by nearly 4%, with a 7% increase in ad revenue, while subscription revenues slightly declined [9] - Health and Wellness segment revenues grew over 7%, with adjusted EBITDA growth exceeding 12% [10] - Connectivity revenues grew by 5%, with subscription and licensing growing by 7% [11] - Cybersecurity and MarTech segment declined nearly 11% due to timing benefits from the previous year [12] Market Data and Key Metrics Changes - Advertising and performance marketing revenue grew by 12.3% compared to the prior period, while subscription and licensing revenues declined by 2% [22] - The company noted strong performance in the advertising markets across tech and shopping, health and wellness, and gaming and entertainment [13] Company Strategy and Development Direction - The company is focused on M&A activity, having completed two acquisitions in Q1 and another signed in early Q2, with a pipeline of opportunities across all segments [7][15] - The strategy includes simplifying B2B product offerings and reducing expenses to improve margins [9] - The company aims to leverage its platforms and technology to identify compelling assets for acquisition [15] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about Q2 growth, reaffirming full-year guidance of 5% revenue growth and 6% adjusted EBITDA growth at the midpoint [7][25] - The company has not experienced notable negative impacts from macroeconomic volatility or tariff discussions to date [25] - Management remains focused on long-term shareholder value rather than short-term quarterly results [27] Other Important Information - The company is actively managing operating costs and capital expenses while continuing share repurchases, having bought back 4.25 million shares over the last four quarters [14][24] - A lawsuit against OpenAI was filed to protect the integrity of journalism and the company's intellectual property rights [16][18] Q&A Session Summary Question: Update on the overall ad market - Management reported strong Q1 performance with ad business growth of over 12%, with positive trends expected to continue [32][33] Question: Priorities for improving connectivity growth - Focus is on the Wi-Fi segment, anticipating strong demand for better wireless networks and the upcoming Wi-Fi 7 deployment [36] Question: Potential macro impacts on advertising demand - Management feels insulated from direct tariff impacts, with optimism in health and wellness and gaming sectors [44][48] Question: Upfront commitments for pharma advertising - Upfront commitments for the year are strong, with optimism for both direct-to-consumer and provider advertising [52][54] Question: Impact of generative AI on business - Approximately 35% of revenues depend on traffic, with AI overviews now accounting for over 20% of top queries [63][66] Question: Capital allocation and M&A market outlook - The M&A environment is favorable, with ongoing active participation across all divisions, and the company is inclined to leverage its position for acquisitions and buybacks [74][80]

Financial Data and Key Metrics Changes - In Q4 2024, total revenue was $412.8 million, reflecting a 5.9% increase from $389.9 million in Q4 2023 [30] - Adjusted EBITDA for Q4 2024 was $171.8 million, a 2.5% growth compared to $167.6 million in the prior year [30] - Adjusted diluted EPS for Q4 2024 increased by 10.7% to $2.58 from the previous year [31] - For the fiscal year 2024, total revenue increased by 2.8% to $1,401.7 million, and adjusted EBITDA grew by 2.3% to $493.5 million [32] Business Line Data and Key Metrics Changes - The Tech & Shopping segment returned to nearly 10% growth in 2024 after a decline of 25% over the previous two years [16] - Gaming & Entertainment has been a mid-single-digit grower for several years, with strong potential for scaling through acquisitions [17] - Health & Wellness and Connectivity segments experienced slow to nominal growth in 2024, but are expected to return to robust growth rates [18] - Advertising and performance marketing revenue grew by 10.6% in Q4 2024, while subscription and licensing revenue grew approximately 1% [37][39] Market Data and Key Metrics Changes - The company reported a net advertising revenue retention rate of approximately 92% for Q4 2024, a significant improvement from the previous year [38] - The average quarterly revenue per advertiser exceeded $135,000 in Q4 2024, indicating strong advertiser engagement [38] - Total subscription and licensing customers increased to 3.65 million, with an average quarterly revenue per customer of $40.44 [40] Company Strategy and Development Direction - The company is transitioning from two to five reportable segments to provide better transparency and align with its strategy [11] - The new segments include Technology & Shopping, Gaming & Entertainment, Health & Wellness, and Connectivity, with a focus on profitability and growth [12][13] - The company plans to maintain an active capital allocation strategy, including M&A opportunities and stock repurchases [45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, expecting revenue growth to accelerate from 2.8% in 2024 to a midpoint of 5% [11] - The company anticipates improved performance in Tech & Shopping and Health & Wellness, alongside continued growth in Gaming & Entertainment and Connectivity [47] - Management acknowledged macroeconomic factors but noted a benign environment in 2024, with expectations for stability in 2025 [70] Other Important Information - The company achieved a free cash flow of over $283 million in 2024, with Q4 2024 free cash flow nearly doubling compared to Q4 2023 [55] - The company has significant leverage capacity, with gross leverage at 1.8 times trailing twelve months adjusted EBITDA [41] Q&A Session Summary Question: Insights on the macro environment and advertising growth - Management noted a strong Q4 for advertising growth, with a planned reduction in B2B revenue impacting overall growth rates [64] - The company expects mid-single-digit ad growth in 2025, with strong performance anticipated in Gaming & Entertainment and Health & Wellness [66] Question: Capital allocation and M&A focus - Management highlighted a healthy M&A environment in 2024, with a pipeline of active deals across all segments [76] - The company is focused on finding attractive acquisition opportunities, particularly in digital media [80] Question: Health & Wellness business outlook - Management expressed confidence in the Health & Wellness segment, anticipating a return to historic growth rates in 2025 despite recent challenges [105] - The company sees opportunities for tuck-in acquisitions to broaden its portfolio in this area [102]

Financial Data and Key Metrics Changes - In Q4 2024, total revenue was $412.8 million, reflecting a growth of 5.9% compared to $389.9 million in Q4 2023 [30] - Adjusted EBITDA for Q4 2024 was $171.8 million, a 2.5% increase from $167.6 million in the prior year [30] - Adjusted diluted EPS for Q4 2024 was $2.58, representing a 10.7% increase compared to Q4 2023 [31] - For the fiscal year 2024, total revenue increased by 2.8% to $1,401.7 million, and adjusted EBITDA grew by 2.3% to $493.5 million [32] Business Line Data and Key Metrics Changes - The Tech & Shopping segment returned to nearly 10% growth in 2024 after a decline of 25% over the previous two years [16] - Gaming & Entertainment has been a mid-single-digit grower for several years, with good growth expected to continue [17] - Health & Wellness and Connectivity segments experienced slow to nominal growth in 2024, but are expected to return to robust growth rates [18] - Advertising and performance marketing revenue grew by 10.6% in Q4 2024, while subscription and licensing revenue grew approximately 1% [37][39] Market Data and Key Metrics Changes - The company reported a net advertising revenue retention rate of approximately 92% for Q4 2024, a significant improvement from the previous year [38] - The average quarterly revenue per advertiser exceeded $135,000 in Q4 2024, significantly higher than the comparable Q4 2023 metric [38] - Total subscription and licensing customers increased to 3.65 million, with an average quarterly revenue per customer of $40.44 [40] Company Strategy and Development Direction - The company is transitioning from two to five reportable segments to provide greater transparency into business performance [11] - The new segments include Technology & Shopping, Gaming & Entertainment, Health & Wellness, and Connectivity, with a focus on profitability and growth [12][13] - The company plans to maintain an active capital allocation strategy, with a focus on M&A opportunities and stock repurchases [45][81] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, expecting revenue growth to accelerate from 2.8% in 2024 to a midpoint of 5% [11] - The company anticipates improved performance in Tech & Shopping and Health & Wellness segments, alongside continued growth in Gaming & Entertainment and Connectivity [47] - Management acknowledged macroeconomic factors but noted a benign environment in 2024, with expectations for stability in 2025 [70] Other Important Information - The company reported a free cash flow of over $283 million for 2024, with Q4 2024 free cash flow nearly doubling compared to Q4 2023 [55] - The company has significant leverage capacity, with gross leverage at 1.8 times trailing twelve months adjusted EBITDA [41] Q&A Session Summary Question: Insights on the macro environment and advertising growth - Management noted a strong Q4 for advertising growth, with expectations for mid-single-digit growth in 2025, despite planned reductions in B2B revenue [60][64] Question: Capital allocation and M&A focus - Management confirmed an active M&A pipeline and a focus on leveraging cash and borrowing capacity for potential acquisitions [73][81] Question: Health & Wellness business outlook - Management expressed confidence in the Health & Wellness segment, anticipating a return to historic growth rates in 2025 despite current challenges [100][105] Question: Updates on licensing and AI impacts - Management emphasized the importance of fair licensing agreements and noted that AI overviews have not significantly impacted click-through rates [89][91]