j2 Global(ZD) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2025, Ziff Davis reported a revenue growth of 3.5% and adjusted EBITDA growth was slight, generating almost $290 million in free cash flow [4][16] - In Q4 2025, revenues declined by 1.5% to $406.7 million, and adjusted EBITDA decreased by 5% to $163.2 million, with an adjusted EBITDA margin of 40.1% [15][16] - Fiscal year 2025 total revenue increased to $1,451.3 million, with adjusted EBITDA rising to $495.1 million, resulting in an adjusted EBITDA margin of 34.1% [16][25] Business Line Data and Key Metrics Changes - The Tech and Shopping segment experienced an 18% revenue decline, significantly impacting overall performance, while the other four segments grew over 6% [4][5] - The Health and Wellness segment achieved record revenue and adjusted EBITDA, growing year-over-year revenues by 8.6% [7][8] - Connectivity revenues increased by 11%, driven by new customers and service adoption [8][9] Market Data and Key Metrics Changes - The CNET Group saw video and social views grow 100% in Q4 and over 80% for the full year 2025, reaching 1 billion views [5][6] - Direct-to-consumer revenues from the IGN Store and Humble Bundle reached almost $90 million in 2025, with significant growth in social engagement [7][8] Company Strategy and Development Direction - The company is focused on delivering profitable growth and strong free cash flow generation in 2026, with expectations of mid-single-digit revenue decline in Tech and Shopping for the first half of the year [11][23] - Ziff Davis plans to continue its active M&A strategy, seeking high-quality brands in high-value categories, leveraging its strong cash flow generation [22][47] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds in the Tech and Shopping segment due to declining web search traffic affecting affiliate commerce revenues, but expressed confidence in offsetting these declines through alternative engagement sources [5][11] - The outlook for 2026 anticipates continued growth in Gaming and Entertainment, Health and Wellness, and Cybersecurity and MarTech segments, with double-digit growth expected in Connectivity [11][12] Other Important Information - The company repurchased approximately 4.8 million shares for nearly $174 million in fiscal year 2025, with an additional 740,000 shares repurchased in 2026 [21][22] - The exit from the game publishing business is expected to eliminate distractions and volatility in the Tech and Shopping segment [17][18] Q&A Session Summary Question: Can you expand on AI search tailwinds in Tech and Shopping? - Management noted that lost search traffic can be offset by other engagement sources, but high-intent traffic from search is harder to replace, particularly affecting affiliate commerce [29][31] Question: What is the expected growth rate for Tech and Shopping? - Management believes Tech and Shopping should achieve mid-single-digit growth in the long term, despite current challenges [45][46] Question: What are the trends in the ad market? - The ad market is segmented, with Gaming & Entertainment and Health & Wellness showing stable growth, while Tech and Shopping faces challenges primarily in affiliate commerce [50][51]