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ZD

ZIFF DAVIS, INC. (ZD)·Q2 2025 Earnings Summary

Executive Summary

  • ZD delivered its strongest revenue growth since 2021, with revenue up 9.8% to $352.2M and Adjusted EBITDA up 11.8% to $107.7M; Adjusted diluted EPS rose 5.1% to $1.24 while GAAP EPS fell on FX and other items .
  • Both revenue and EPS beat Wall Street consensus; revenue beat by ~$14M and EPS by ~$0.05; Adjusted EBITDA outperformed company-defined metrics but may differ from SPGI’s EBITDA definition; guidance for FY25 was reaffirmed across revenue, Adjusted EBITDA and Adjusted EPS .
  • Four of five segments grew, led by Health & Wellness (+15.7%), Connectivity (+14.2%) and Tech & Shopping (+11.3%); Cybersecurity & Martech was ~flat (-0.9%) and management expects a return to growth in Q3 .
  • Call catalysts: accelerating organic growth, robust ad momentum (15.5%), Connectivity’s “rule of 60” profile, AI product traction, and ongoing buybacks/M&A; FX-driven “other loss” reduced EPS by ~$0.10, tempering GAAP EPS optics .

What Went Well and What Went Wrong

What Went Well

  • Double-digit consolidated growth; “breakthrough results” with strongest quarterly revenue growth since 2021, notably Health & Wellness and Connectivity .
    Quote: “Our second quarter results…marked our strongest quarterly revenue growth since 2021…breakthrough results from our Connectivity and Health & Wellness businesses.” — CEO Vivek Shah .
  • Advertising and performance marketing up 15.5% YoY; pharma commercialization and consumer health momentum with record performance at Prime Education; Connectivity returned to double-digit organic growth with ~47–48% EBITDA margin .
  • Strategic execution: AI-enabled products (Viper IES for M365, AI chat at RetailMeNot, AI-driven audience platform “moments of influence”), CNET/Best Buy partnership renewal, Spiceworks paid subscription launch (20,000+ paying business customers) .

What Went Wrong

  • GAAP EPS and net income down YoY on FX-driven “other loss” and mix; diluted GAAP EPS fell to $0.62 (vs $0.77) and net income to $26.3M (vs $36.9M) .
  • Cybersecurity & Martech revenue declined ~1% YoY; while adjusted EBITDA grew, the segment remains a drag vs peers until growth resumes (management guided for Q3 improvement) .
  • Q2 other loss net and FX dynamics reduced EPS by ~$0.10; incremental pressure from interest and D&A tied to capital allocation activities; CFO flagged EBITDA margin variability by mix/M&A, and isolated drag from a sunsetted PC game investment within Tech & Shopping .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$320.8 $328.6 $352.2
Income from Operations ($USD Millions)$28.6 $35.1 $33.5
Operating Margin (%)8.9% 10.7% 9.5%
Net Income ($USD Millions)$36.9 $24.2 $26.3
GAAP Diluted EPS ($)$0.77 $0.56 $0.62
Adjusted EBITDA ($USD Millions)$96.3 $100.2 $107.7
Adjusted EBITDA Margin (%)30.0% 30.5% 30.6%
Adjusted Net Income ($USD Millions)$53.7 $48.9 $51.6
Adjusted Diluted EPS ($)$1.18 $1.14 $1.24
Cash from Operations ($USD Millions)$50.6 $20.6 $57.1
Free Cash Flow ($USD Millions)$25.1 $(5.0) $26.9

Estimate comparison (SPGI):

MetricConsensus (Q2 2025)Actual (Q2 2025)
Revenue ($USD Millions)$338.23*$352.21
Primary EPS ($)$1.186*$1.24
EBITDA ($USD Millions)$101.22*$107.65 (Adj. EBITDA)

Values with asterisk are retrieved from S&P Global.

Segment revenues and profitability:

SegmentQ2 2024 Revenue ($M)Q2 2025 Revenue ($M)Q2 2024 Adj. EBITDA ($M)Q2 2025 Adj. EBITDA ($M)
Technology & Shopping$72.6 $80.8 $17.3 $18.3
Gaming & Entertainment$43.0 $46.2 $12.3 $15.2
Health & Wellness$86.0 $99.5 $30.1 $33.4
Connectivity$50.3 $57.4 $24.2 $27.2
Cybersecurity & Martech$69.0 $68.3 $22.2 $23.4
Corporate——$(9.8) $(9.8)

Revenue mix:

Revenue TypeQ2 2024 ($M)Q2 2025 ($M)
Advertising & Performance Marketing$170 $197
Subscription & Licensing$142 $149

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Revenues ($USD Millions)FY 2025$1,442 – $1,502 $1,442 – $1,502 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$505 – $542 $505 – $542 Maintained
Adjusted diluted EPS ($)FY 2025$6.64 – $7.28 $6.64 – $7.28 Maintained
Adjusted effective tax rate (%)FY 202523.25% – 25.25% 23.25% – 25.25% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Ad market momentumReaccelerating into FY25; segment disclosures introduced; ad + perf mkt up in Q4 Ad & perf marketing +15.5% YoY; strong pharma, gaming, tech Improving
Connectivity growth driversWiFi cycle softness in 2024; setup for 2025; speedtest/DownDetector strong Double-digit organic growth; ~47–48% margins; emerging markets demand Positive reacceleration
AI initiativesEarly use across portfolio; focus on first-party data AI products launched: Viper IES, RMN chatbot (~50% deflection), AI audience platform; Lose It! AI features improve outcomes Scaling deployment
Cybersecurity & MartechDeclines in 2024; stabilization efforts underway ~Flat revenue (-0.9%); adjusted EBITDA +; expected to return to growth in Q3 Stabilizing
Generative search/AIO exposureMinimal direct impact highlighted; diversified revenue mix AIO exposure tracked; ~1/3 citations; programmatic only ~3% revenue Managed risk
Capital allocationBuybacks and active M&A in Q4/Q1 Continued buybacks; multiple tuck-ins; disciplined leverage Ongoing

Management Commentary

  • “Our second quarter results…marked our strongest quarterly revenue growth since 2021…breakthrough results from our Connectivity and Health & Wellness businesses.” — CEO Vivek Shah .
  • “We are reaffirming the fiscal year 2025 guidance…top end implies >7% revenue growth, nearly 10% adjusted EBITDA growth and 10% adjusted EPS growth vs 2024.” — CFO Bret Richter .
  • On AI productization: “Viper Integrated Email Security…powered by an AI engine…identify and block threats…RetailMeNot’s AI chatbot achieved ~50% case deflection…Lose It! AI voice/photo logging increased engagement and outcomes.” — Vivek Shah .
  • On ad mix and resilience: “We are not a programmatic ads business…less than $50M of annual programmatic…we’re highly endemic and campaign-driven.” — Vivek Shah .
  • On FX/OI impact: “Changes in certain foreign exchange rates…drove an increase in other loss net…reduced our Q2 2025 EPS by approximately $0.10 per diluted share.” — CFO .

Q&A Highlights

  • Sustainability of growth and margin variability: mix/M&A cause near-term lumpiness; focus remains mid-30s adjusted EBITDA margins over time; sunsetted PC game investment was a small drag in Tech & Shopping but being wound down .
  • Generative search and AI overviews: low exposure given traffic dependence; ~1/3 of AIOs cite ZD; programmatic is ~3% revenue; diversified model mitigates risk .
  • Health & Wellness advertiser participation: broadening beyond pharma to adjacent health brands; Lose It! free tier now monetized with ads; advertiser count up notably .
  • Connectivity metrics: higher-price Speedtest/RootMetrics demand; Ekahau growth expected with WiFi 7 cycle in 2026; Q2 drove double-digit organic growth .
  • Capital allocation: continued share repurchases (~10% of shares over last 4 quarters) and active tuck-in M&A; disciplined leverage with undrawn revolver .

Estimates Context

  • Q2 beats: Revenue $352.21M vs $338.23M consensus*; Primary EPS $1.24 vs $1.186*; Adjusted EBITDA $107.65M vs SPGI EBITDA consensus $101.22M*, noting definitional differences (company reports Adjusted EBITDA) .

  • of estimates: 6 for both revenue and EPS (Q2 2025)*.

  • Implications: Street likely raises ad-driven segments (Health & Wellness, Connectivity) and revisits Cybersecurity & Martech trajectory given management’s Q3 growth expectation .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue and EPS beats with guidance reaffirmed suggest 2H momentum; management targets mid-single-digit revenue growth in Q3/Q4 with stronger Q4 margins .
  • Ad strength is broad-based (pharma, gaming, consumer tech), with low programmatic exposure and growing first-party AI capabilities — supportive for quality revenue mix .
  • Connectivity has returned to double-digit organic growth with elite margin structure; international demand and awards/licensing underpin durable growth .
  • Cybersecurity & Martech stabilization plus tuck-in M&A could turn the segment to growth by Q3; VPN momentum and new SMB email security product expand TAM .
  • FX and other non-operating items can swing GAAP EPS; focus on Adjusted EBITDA/EPS for operating signal (Q2 other loss cut EPS by ~$0.10) .
  • Active capital allocation (buybacks, tuck-ins) at depressed valuation provides EPS lever and sum-of-parts re-rating potential; net leverage remains conservative .
  • Near-term trading: favor positive estimate revisions and re-rating on segment transparency and 2H growth; medium-term thesis: diversified verticals, high-margin data/software (Connectivity), and AI-enabled monetization across properties .

Additional Relevant Press Releases (Q2 2025)

  • RetailMeNot’s Summer Checklist (June 5–9) supports consumer savings amid macro pressure; brand engagement driver heading into seasonally strong periods .