j2 Global(ZD)2024-08-08 15:43Financial Data and Key Metrics Changes - Q2 2024 revenues were 326 million in Q2 2023 [16] - Adjusted EBITDA for Q2 2024 was 106.7 million in the prior year [16] - Adjusted diluted EPS for Q2 2024 was 1.27 in Q2 2023 [16] - Year-to-date free cash flow was 113 million excluding the impact of TDS [28] Business Line Data and Key Metrics Changes - Digital Media segment revenues were flat in Q2 2024, with Tech Media revenue declining [4] - Cybersecurity and MarTech segment saw a decline of 5.8% in Q2, down from 3.3% growth in Q1 [5] - Advertising and performance marketing revenue declined 2.7% year-over-year, while subscription and licensing revenue grew 0.3% [18][19] Market Data and Key Metrics Changes - The company reported a net advertising and performance marketing revenue retention rate of 90.5% for Q2 2024 [19] - The gaming and entertainment sector showed resilience despite turmoil in the gaming industry [37] Company Strategy and Development Direction - The company is focused on M&A to enhance existing platforms, with recent acquisitions of Gamer Network and CNET [8][10] - The strategy includes capital allocation towards accretive acquisitions and share buybacks, with an increased buyback program [10][26] - The company aims to leverage AI in products to improve user engagement and retention [11][50] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth in the second half of 2024 despite Q2 performance being below expectations [4][6] - The company anticipates improved margins and contributions from M&A to support adjusted EPS growth [27][36] - Management noted that the advertising market is mixed, with challenges in B2B tech advertising but positive trends in consumer tech and health [36] Other Important Information - The company has a strong balance sheet with 350 million, with an extended maturity date [22] Q&A Session Summary Question: Insights on M&A strategy and opportunities - Management indicated optimism about the M&A market, noting that lower valuations and pressure on private equity firms are creating opportunities [30][32] Question: Confidence in growth areas like gaming and health - Management highlighted modest organic improvement and cost control measures as key factors for confidence in growth in these areas [34][35] Question: Impact of CNET acquisition on advertising market - The acquisition is seen as highly strategic, enhancing the company's position in the tech vertical and improving advertising capabilities [41][42] Question: Long-term free cash flow conversion expectations - Management reaffirmed a target of mid-to-high 50s for free cash flow conversion, contingent on performance and market dynamics [44][45] Question: AI's impact on traffic and user engagement - Management noted no significant impact from AI overviews on organic search traffic but sees potential benefits in user engagement from AI tools [48][50]