Ziff Davis Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: $286.7 million, down 2.7% year-over-year from $294.8 million.

Adjusted EBITDA: $76.8 million, a decline of 3.7% from $79.8 million in Q2 2025; adjusted EBITDA margin at 26.8%.

Adjusted EPS: $1.03, up 13.2% from $0.91, primarily due to share repurchase activities.

Free Cash Flow: $54 million, a 100% increase from Q2 2025.

Share Repurchases: 2.8 million shares repurchased in Q2 2026, totaling $200 million year-to-date, reducing shares outstanding by nearly 11%.

2Strategic Updates and Business Highlights

Connectivity Business Sale: Completed sale to Accenture for $1.2 billion, reflecting a 14.5x EBITDA multiple, aimed at unlocking shareholder value.

Segment Performance:

Gaming & Entertainment: Revenue growth of nearly 1%, driven by Humble Bundle; ad revenue decline at IGN due to market conditions.

Tech & Shopping: Revenue down 5% but improved adjusted EBITDA; focus on growing audiences through social media channels.

Health & Wellness: Revenue down nearly 5%, with HCP advertising impacted by reduced pharma spending; growth in consumer DTC advertising.

Cybersecurity & Martech: Revenue and adjusted EBITDA both grew nearly 1%, with strong performance from IPVanish and smtp.com.

AI Initiatives: Significant increase in AI-authored code, improving operational efficiency and reducing engineering costs.

3Forward Guidance and Outlook

Q3 2026 Expectations: Revenue expected to decline low to mid-single digits year-over-year, with sequential growth anticipated. Adjusted EBITDA margin expected to improve slightly.

Q4 2026 Outlook: Anticipated improvement in revenue decline and adjusted EBITDA margin, with continued benefits from share buybacks.

Tax Obligations: Approximately $200 million expected for tax payments related to the Connectivity sale, with plans to settle most by Q1 2027.

4Bad News, Challenges, or Points of Concern

Revenue Declines: Overall revenue decline of 2.7% and specific segments like Tech & Shopping and Health & Wellness facing headwinds.

HCP Advertising Pressure: Large pharma clients reducing spend and shifting to lower-cost platforms, impacting MedPage's advertising revenue.

Search Traffic Declines: Continued decreases in traditional search traffic affecting revenue, with increased competition from AI-driven platforms.

Market Conditions: Challenges in the gaming market affecting ad revenues at IGN, with reliance on blockbuster game releases for recovery.

5Notable Q&A Insights

HCP Advertising: Sequential growth expected in MedPage, but competition from AI platforms remains a concern.

Gaming Outlook: Anticipation of recovery with major game releases like GTA 6, which could drive traffic and revenue for IGN.

Acquisition Strategy: Ziff Davis remains open to acquisitions, particularly in the small to mid-market, while balancing stock buybacks.

AI Content Licensing: The company is cautious about entering licensing agreements that may compromise their rights, preferring to wait for clearer market conditions. Overall, Ziff Davis reported a mixed quarter with strategic asset monetization efforts and share buybacks positively impacting EPS, while facing challenges in revenue growth and market conditions across several segments.