j2 Global(US:ZD)2025-11-07 14:32Financial 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]