ZD — Ziff Davis, Inc.

Ziff Davis Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Q4 2025 Revenue: $406.7 million, down 1.5% from $412.8 million in Q4 2024.
• Q4 Adjusted EBITDA: $163.2 million, a decline of 5% year-over-year, with an adjusted EBITDA margin of 40.1%.
• Adjusted Diluted EPS: $2.56, benefiting from share repurchases.
• Fiscal Year 2025 Revenue: $1.451 billion, up 3.5% year-over-year.
• Fiscal Year Adjusted EBITDA: $495.1 million, with a margin of 34.1%.
• Free Cash Flow: $287.9 million for FY 2025, with Q4 free cash flow at $157.8 million, a significant increase from $131.1 million in Q4 2024.

2. Strategic Updates and Business Highlights

• Share Repurchases: $174 million deployed for share buybacks in FY 2025, reducing shares outstanding by over 10%. The Board approved an additional 10 million shares for repurchase.
• Segment Performance:
  • Tech & Shopping: Revenue declined 18% in Q4, primarily due to decreased web search traffic affecting affiliate commerce.
  • Gaming & Entertainment: Grew 1.5% in Q4, with notable performance from Humble Bundle and IGN.
  • Health & Wellness: Achieved record revenue and adjusted EBITDA, growing 8.6% in Q4.
  • Connectivity: Revenues up 11% in Q4, driven by new product launches.
  • Cybersecurity & Martech: Grew 2.7% in Q4, primarily from cybersecurity services.
• M&A Activity: Closed 7 acquisitions in FY 2025, investing $68.7 million, with plans to continue pursuing strategic acquisitions in 2026.

3. Forward Guidance and Outlook

• 2026 Expectations:
  • No formal guidance due to ongoing strategic reviews.
  • Anticipated mid-single-digit revenue decline in Tech & Shopping for the first half of 2026, with improvements expected in the second half.
  • Low to mid-single-digit growth forecasted for Gaming & Entertainment, Health & Wellness, and Cybersecurity & Martech segments.
  • Continued focus on maintaining adjusted EBITDA margins around 34%.

4. Bad News, Challenges, or Points of Concern

• Tech & Shopping Segment: Significant revenue decline due to reduced web search traffic impacting affiliate commerce, which is harder to replace. The segment is expected to face challenges in the first half of 2026.
• Games Publishing Exit: The segment contributed negatively to revenue and EBITDA; however, the sale is seen as beneficial for reducing volatility in results.
• Market Conditions: Concerns about AI competition and search dynamics affecting various segments, particularly in Tech & Shopping.
• Ad Market Trends: Mixed signals with some segments performing well while Tech & Shopping struggles.

5. Notable Q&A Insights

• AI and Traffic Dynamics: Vivek Shah discussed the fungibility of traffic and efforts to offset declines in search traffic through alternative engagement methods. The affiliate commerce business is particularly vulnerable.
• M&A Opportunities: There is a belief that current market conditions present unique opportunities for acquisitions, especially given the fear in digital media valuations.
• Search Impact on Health & Wellness: Shah expressed confidence that search dynamics would not significantly impact the Health & Wellness segment due to its diverse engagement strategies.
• Ad Market Overview: The ad market is segmented, with varying growth rates across divisions; Health & Wellness is expected to moderate but remain stable.

This summary encapsulates the key financial metrics, strategic initiatives, forward-looking statements, challenges, and insights from the Q&A session, providing a comprehensive overview of Ziff Davis's performance and outlook for Q4 2025 and beyond.