Summary of Ziff Davis Conference Call Company Overview - Ziff Davis is a digital media and internet company with a portfolio of content and ad-supported brands, subscription-supported software brands, and subscription-supported data businesses [4][5] - The company has a history of growth through systematic acquisitions over the past 15 years [4] Financial Performance and Strategic Initiatives - Approximately 60% of Ziff Davis's revenue comes from advertising, with the remainder from subscriptions and licensing [4] - The company is currently exploring value-creating opportunities, including potential divestitures, due to a perceived disconnect between its market valuation and intrinsic value [5][8] - Ziff Davis is trading at roughly three to four times EBITDA, despite having strong growth and margins [7][8] Segment Performance - **Health and Wellness**: This is the largest segment, showing a 13% top-line growth in Q3 and 18% adjusted EBITDA growth. The segment benefits from a robust pharma market and digital commercialization trends [11][12] - **Connectivity**: The Ookla business, which includes Speedtest, is undergoing a reset with new leadership and is expected to return to growth, projecting a low double-digit growth rate for the upcoming year [13][14] - **Cybersecurity and MarTech**: The cybersecurity segment, including Viper and IPVanish, is returning to growth, although it has taken longer than expected [15] - **Tech and Shopping**: This segment experienced a decline in Q3, primarily due to winding down a part of the business, but is expected to stabilize [15][16] - **Gaming and Entertainment**: This segment is characterized by volatility due to game release cycles but remains a strong brand with IGN Entertainment [17] AI and Market Trends - Ziff Davis generates about one-third of its revenue from web traffic, with search-related revenue accounting for mid-teens percentage of total revenue [23] - The company is observing increased search volume driven by AI, but also significant volatility in search rankings, which impacts traditional publishers [24][25] - Ziff Davis is focused on maintaining trust in content quality amidst the rise of AI-generated content [26] Product Development and Innovation - Ziff Davis is integrating AI into its products, such as the Lose It app, which uses visual technology for food logging, enhancing user engagement and retention [28][29] - The company is developing AI-based insight and ad platforms, leveraging audience signals for market research and ad targeting [30][34] Capital Allocation and M&A Strategy - Ziff Davis prioritizes M&A, having closed seven deals in the current year, while also investing heavily in stock buybacks [41][42] - The company is selective in M&A to ensure cash flow generation aligns with risk-reward profiles [41] - Recent investments in connectivity products aim to expand market presence and address customer needs [43][45] Conclusion - Ziff Davis is actively exploring ways to unlock value within its portfolio while maintaining a focus on growth through both organic and inorganic means. The company is optimistic about its segments, particularly health and wellness, and is strategically investing in AI and product development to enhance its market position [38][39][40]

Financial Data and Key Metrics Changes - Q3 2025 revenues were $363.7 million, reflecting growth of nearly 3% compared to $353.6 million in Q3 2024 [16] - Adjusted EBITDA for Q3 2025 was $124.1 million, a slight decline of less than 1% from $124.7 million in the prior year [17] - Adjusted diluted EPS increased by more than 7% to $1.76 from $1.64 in Q3 2024, driven by share buybacks [17][25] Business Line Data and Key Metrics Changes - Tech and shopping revenue dropped 2% in Q3, with adjusted EBITDA down 12%, primarily due to the wind down of game publishing activities [8][20] - Health and wellness segment saw a 13% year-over-year revenue growth and 18% adjusted EBITDA growth, marking high watermarks for the division [10] - Cybersecurity and martech revenue grew 2% in Q3, driven by strong performance in consumer VPN and cloud backup [12] Market Data and Key Metrics Changes - Connectivity division delivered 2% year-over-year revenue growth, with year-to-date revenues up 7% [11] - Gaming and entertainment revenues were about 4% lower year-over-year, but adjusted EBITDA grew nearly 3% [9] - Advertising and performance marketing revenues grew 5.9% year-over-year, while subscription and licensing revenues grew by 2% [18] Company Strategy and Development Direction - The company is evaluating potential opportunities to unlock shareholder value, engaging outside advisors for this purpose [5][6] - There is a focus on maximizing value for shareholders while maintaining a profitable and growing business structure [6][7] - The company aims to continue its acquisition program while also engaging in share buybacks to capitalize on perceived valuation disconnects [15][23] Management's Comments on Operating Environment and Future Outlook - Management noted that the disconnect between the current market value and intrinsic value is at its widest, prompting a strategic review [31] - The company remains optimistic about its performance despite industry headwinds, particularly in segments like health and wellness [55] - Management anticipates that fiscal year 2025 results will fall within the lower half of the guidance range, with Q4 expected to be the largest revenue quarter [24] Other Important Information - The company has significant cash reserves of $503.4 million and long-term investments of $119.6 million, with a gross leverage of 1.7x trailing 12 months adjusted EBITDA [22] - Year-to-date free cash flow was $261.2 million, indicating strong cash generation capabilities [25] - The company has repurchased over 3.6 million shares since the start of 2025, deploying $109 million in share buybacks [23] Q&A Session Summary Question: What are the thoughts on valuation disconnects? - Management believes the disconnect between current and intrinsic value is at its widest, with interest from strategic and private equity investors [31][32] Question: Are there any properties considered off-limits for divesting? - Management stated that nothing is off the table, but exploring opportunities for select units is likely to be more value-accretive than considering the entire company [38][39] Question: How is the company positioned regarding AI search impacts? - Management indicated that the company is well-positioned and insulated from fluctuations in search traffic, with only 17.5% of revenue exposure coming from search [40] Question: What is the outlook for advertising growth in Q4? - Management expects subscription growth to outpace advertising growth in Q4, with some softness in product launches impacting advertising [58] Question: What are the M&A opportunities in the current market? - Management sees potential for aggressive acquisitions of smaller dislocated properties, balancing share buybacks and acquisitions [65][66] Question: Is there a shift towards targeting different growth profiles in M&A? - Management emphasized a continued focus on cash-on-cash returns and free cash flow, without signaling a change in their acquisition strategy [81][83]

Financial Data and Key Metrics Changes - Q3 2025 revenues were $363.7 million, reflecting growth of nearly 3% compared to $353.6 million in the prior year period [16] - Adjusted EBITDA for Q3 2025 was $124.1 million, a slight decline of less than 1% from $124.7 million in the prior year [17] - Adjusted diluted EPS increased by more than 7% to $1.76 from $1.64 in Q3 2024, aided by share buybacks [17][25] Business Line Data and Key Metrics Changes - Tech and shopping revenue dropped 2% in Q3, with adjusted EBITDA down 12%, primarily due to the wind down of game publishing activities [8][20] - Health and wellness segment saw a 13% year-over-year revenue growth and 18% adjusted EBITDA growth, marking high watermarks for the division [10] - Cybersecurity and martech revenue grew 2% in Q3, driven by strong performance in consumer VPN and cloud backup [12] Market Data and Key Metrics Changes - Year-to-date revenues in gaming and entertainment were up approximately 2%, with Q3 being Humble Bundle's best quarter of the year [9] - Connectivity division delivered 2% year-over-year revenue growth, with year-to-date revenues up 7% [11] - Advertising and performance marketing grew 5.9% year-over-year, while subscription and licensing revenues grew by 2% [18] Company Strategy and Development Direction - The company is evaluating potential opportunities to unlock shareholder value, engaging outside advisors for this purpose [5][6] - The focus remains on maximizing value for shareholders while continuing to operate the current profitable business structure [6] - The company is committed to a disciplined acquisition program and has closed seven acquisitions in the first nine months of 2025 [22][23] Management's Comments on Operating Environment and Future Outlook - Management noted that the disconnect between the current market value and intrinsic value of the company is at its widest [31] - The company anticipates fiscal year 2025 total revenues and adjusted diluted EPS to be within the lower half of its guidance range [24] - Management expressed optimism about the performance of various segments despite broader industry headwinds [56] Other Important Information - The company has significant cash reserves of $503.4 million and long-term investments of $119.6 million, with a gross leverage of 1.7 times trailing 12 months adjusted EBITDA [22] - Free cash flow for Q3 2025 was $108.2 million, 35% higher than the prior year period [25] Q&A Session Summary Question: Insights on valuation disconnect - Management acknowledged the valuation disconnect and noted that the recent segment-level reporting has attracted interest from strategic and private equity investors [30][32] Question: Strategic review and potential divestitures - Management stated that no specific properties are off-limits and that they are open to exploring opportunities for select units [38][39] Question: Impact of AI reviews on traffic - Management indicated that the company is well-positioned against fluctuations in search traffic, with only 17.5% of total revenue being web traffic dependent [40] Question: M&A opportunities and market dynamics - Management expressed interest in acquiring smaller dislocated properties and emphasized the balance between share buybacks and acquisitions [65] Question: Future growth and business model considerations - Management confirmed a preference for acquiring leadership brands and emphasized the importance of cash-on-cash returns in their investment strategy [81][82]

Financial Data and Key Metrics Changes - In Q3 2025, revenues increased to $363.7 million, up nearly 3% from $353.6 million in the prior year [16] - Adjusted EBITDA for Q3 2025 was $124.1 million, a slight decline of less than 1% from $124.7 million year-over-year [17] - Adjusted diluted EPS rose by more than 7% to $1.76 from $1.64 in Q3 2024, aided by share buybacks that reduced the weighted average diluted shares by 7.5% [17][25] Business Line Data and Key Metrics Changes - Tech and shopping revenue fell by 2% in Q3, with adjusted EBITDA down 12%, primarily due to the wind down of game publishing activities [8][19] - Health and wellness segment saw a 13% year-over-year revenue growth and 18% adjusted EBITDA growth, marking high watermarks for the division [10] - Cybersecurity and martech revenue grew by 2% in Q3, driven by strong performance in consumer VPN and cloud backup [12] Market Data and Key Metrics Changes - The connectivity division achieved 2% year-over-year revenue growth, with year-to-date revenues up 7% [11] - Gaming and entertainment revenues were approximately 4% lower year-over-year, but adjusted EBITDA grew nearly 3% [9] - Advertising and performance marketing revenues grew by 5.9% year-over-year, while subscription and licensing revenues increased by 2% [18] Company Strategy and Development Direction - The company is evaluating potential opportunities to unlock shareholder value, having engaged outside advisors for this purpose [4][5] - There is a focus on maximizing value for shareholders while maintaining a profitable and growing business structure [5][26] - The company is committed to a disciplined acquisition strategy, having closed seven acquisitions in the first nine months of 2025 [22][23] Management's Comments on Operating Environment and Future Outlook - Management noted that the disconnect between the current market value and intrinsic value of the company is at its widest [29] - The company anticipates fiscal year 2025 total revenues and adjusted diluted EPS to be within the lower half of its guidance range [24] - Management expressed optimism about the performance of various segments despite broader industry headwinds [39] Other Important Information - The company has significant cash reserves of $503.4 million and long-term investments of $119.6 million, with a gross leverage of 1.7 times trailing 12 months adjusted EBITDA [22] - Free cash flow for Q3 2025 was $108.2 million, representing a 35% increase year-over-year [25] - The company plans to continue its stock repurchase program, having repurchased 3 million shares year-to-date [23] Q&A Session Summary Question: Insights on valuation disconnect - Management acknowledged the valuation disconnect and noted that the recent segment-level disclosures have attracted interest from strategic and private equity investors [28][29] Question: Strategic review and potential divestitures - Management stated that no specific properties are off-limits for divestiture, but exploring opportunities for select units is likely to be more value-accretive [31] Question: Impact of AI on traffic and revenue - Management indicated that the company is well-positioned against fluctuations in search traffic, with only 35% of total revenue dependent on web traffic [32] Question: Future M&A opportunities - Management expressed optimism about acquiring smaller properties that may not have weathered recent market changes as well as continuing to buy back shares [44][45] Question: Philosophical shift in acquisitions - Management clarified that the focus remains on cash-on-cash returns and that there is no change in the overall approach to acquisitions [51]