Executive Summary

Q4 delivered 5.9% revenue growth to $412.8M and 10.7% growth in adjusted diluted EPS to $2.58, with adjusted EBITDA up 2.5% to $171.8M; however, management said the quarter came in “a bit short” of internal estimates due to Humble Games slippage, lower-than-expected Connectivity bookings, and an indirect tax contra-revenue item .
New 5-segment reporting increases transparency; Technology & Shopping led YoY growth in Q4, while Cybersecurity & Martech remained the only 2024 decliner but is expected to return to growth in H2’25 .
2025 guidance implies an acceleration: revenue +5% at midpoint to $1.472B, adjusted EBITDA +6% to $523M, adjusted diluted EPS +5% to $6.96; seasonality to be >20% of revenue in Q1 and ~30% in Q4; non‑GAAP tax rate 23.25–25.25% .
Capital allocation: $225M deployed to M&A and $185M to repurchases in 2024; leverage modest at 1.8x gross and 0.7x net with $664M cash and investments, positioning ZD to stay active in M&A in 2025 .

What Went Well and What Went Wrong

What Went Well
- Advertising and performance marketing grew 10.6% in Q4; net revenue retention improved to 92%, and revenue per advertiser rose to ~$136K, highlighting healthier demand and mix shift toward larger customers .
- Technology & Shopping segment revenue rose 26% YoY in Q4 (helped by CNET and consumer tech), and Gaming & Entertainment grew 3.5% YoY; management expects Tech & Shopping to be the strongest 2025 grower with margin expansion .
- Strong FCF: Q4 free cash flow nearly doubled YoY to $131.1M; FY’24 FCF reached $283.7M (57.5% of adjusted EBITDA), supporting repurchases and deal capacity .
- Quote: “We believe 2024 marked an inflection point… returned to revenue, adjusted diluted EPS, and free cash flow growth.” – CEO Vivek Shah .
What Went Wrong
- Q4 fell short of internal plan by ~${10}M revenue; Humble Games titles slipped or underperformed and large Ookla data deals did not materialize in Q4; an indirect tax audit created a contra‑revenue item impacting reported revenue and adjusted EBITDA .
- Health & Wellness was flat for FY’24 (+0.1% YoY) and Connectivity declined YoY in Q4; Cybersecurity & Martech declined ~3% in FY’24, though margins held ~35% .
- Operating margin pressure: Q4 operating income fell to $78.5M from $80.7M and adjusted EBITDA margin dipped to 41.6% (−140 bps YoY) due to mix and the issues above .

Financial Results

QTD trend (sequential)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($M)	$320.8	$353.6	$412.8
Adjusted EBITDA ($M)	$96.3	$124.7	$171.8
Adjusted EBITDA Margin (%)	30.0%	35.3%	41.6%
Adjusted Diluted EPS ($)	$1.18	$1.64	$2.58

YoY snapshot (Q4)

Metric	Q4 2023	Q4 2024
Revenue ($M)	$389.9	$412.8
Adjusted EBITDA ($M)	$167.6	$171.8
Adjusted EBITDA Margin (%)	43.0%	41.6%
GAAP Diluted EPS ($)	$1.29	$1.43
Adjusted Diluted EPS ($)	$2.33	$2.58

Segment revenue (Q4 YoY)

Segment ($M)	Q4 2023	Q4 2024
Technology & Shopping	$105.2	$132.9
Gaming & Entertainment	$49.2	$50.9
Health & Wellness	$106.5	$105.7
Connectivity	$57.0	$54.3
Cybersecurity & Martech	$72.0	$69.0
Total	$389.9	$412.8

Q4 segment profit (Adjusted EBITDA)

Segment ($M)	Q4 2023	Q4 2024
Technology & Shopping	$49.8	$58.3
Gaming & Entertainment	$24.8	$24.7
Health & Wellness	$46.8	$46.8
Connectivity	$30.3	$29.5
Cybersecurity & Martech	$25.4	$22.4
Corporate	$(9.6)	$(9.9)
Total	$167.6	$171.8

Key Operating Metrics (Q4)

KPI	Q4 2023	Q4 2024
Advertising & Performance Marketing Revenue ($M)	$233	$258
A&PM Net Revenue Retention (%)	87.1%	92.0%
A&PM Customers (count)	1,943	1,899
A&PM Revenue per Customer ($)	$119,975	$135,762
Subscription & Licensing Revenue ($M)	$146	$148
S&L Customers (000s)	3,266	3,649
S&L Avg Revenue per Customer ($)	$44.77	$40.44
S&L Churn (%)	2.86%	2.83%

Cash Flow and Balance Sheet

Metric	FY 2023	FY 2024
Free Cash Flow ($M)	$211.2	$283.7
Cash & Cash Equivalents ($M, 12/31)	$737.6	$505.9
Long-term Investments ($M, 12/31)	$140.9	$158.2
Gross Debt ($M, 12/31)	$1,001.3	$864.3
Gross Debt / FY Adj. EBITDA (x)	—	1.8x
Net Debt / FY Adj. EBITDA (x)	—	0.7x; 0.4x incl. investments

Note: Adjusted metrics are non‑GAAP; see reconciliations in the press release and slides .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($B)	FY 2025	N/A	$1.442–$1.502 (midpoint $1.472)	New
Adjusted EBITDA ($M)	FY 2025	N/A	$505–$542 (midpoint $523)	New
Adjusted Diluted EPS ($)	FY 2025	N/A	$6.64–$7.28 (midpoint $6.96)	New
Non-GAAP Effective Tax Rate	FY 2025	N/A	23.25%–25.25%	New
Diluted Share Count	FY 2025 Plan	N/A	~43M (excl. potential convert dilution)	New
Revenue Seasonality	FY 2025	N/A	>20% Q1; ~30% Q4	New

Management did not provide prior 2025 guidance; this is an initial guide. Reconciliations for forward-looking non‑GAAP are not provided due to variability of non‑operating items .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2, Q3 2024)	Current Period (Q4 2024)	Trend
AI/search and traffic impact	Q2: AI Overviews in ~8% of key queries; no material traffic impact; focus on licensing fairness and patience . Q3: AI Overviews ~10%; high-domain brands advantaged; diversified traffic sources .	AI Overviews present in only 12% of top queries; no material aggregate CTR impact; diversified model (traffic-dependent ads ~35% of revenue) limits risk .	Stable; cautious but confident positioning in AI era.
AI product initiatives	Q2: Ekahau AI Pro Online, VIPRE AI Advisor, Lose It! voice logging . Q3: ongoing AI chat in IGN; continued product embeds .	Lose It! AI features highlighted by CNN; Health eCareers AI job fit case study; engagement uplift (18%+, 30% applications) .	Positive adoption and engagement.
Advertising environment	Q2: softness in B2B tech; health and retail issues; reaffirmed FY guide . Q3: A&PM +5.8%; stronger consumer tech, gaming; retention ~92% .	Q4 A&PM +10.6%; retention 92%, higher revenue per advertiser; mid-single-digit ad growth embedded in 2025 midpoint .	Improving; mix shift toward larger customers.
Health & Wellness	Q2: slightly positive; provider-side headwinds . Q3: DTC healthy; provider pulled back .	Upfronts strong; DTC vs. DTP balance improving; GLP-1 exposure low but strategic via Lose It! bundling .	Stabilizing; poised to re-accelerate in 2025.
Connectivity (Ookla/Ekahau)	Q2: mid-single-digit growth; Ekahau product updates . Q3: steady; some licensing/one-time revenue timing .	Q4 shortfall from lumpy large deals and deprioritized ads; major reorg (leadership and 20% org changes); focus on subscriptions/data; stronger 2025 expected .	Near-term pressure; 2025 growth re-acceleration.
Cybersecurity & Martech	Q2: lowered FY outlook to low-single-digit decline; e-mail strength; SEO (Moz) softness . Q3: still down YoY, margins preserved .	FY’24 revenue −2.6%; margins ~35%; expected to return to growth in H2’25 .	Gradual improvement; H2’25 inflection targeted.
M&A and capital allocation	Q2: CNET pending; active pipeline; repurchases resumed . Q3: closed CNET; bought back 2M shares; leverage 1.8x .	2024 deployed $225M M&A, $185M buybacks; 6.2M shares remain authorized; 2025 M&A expected at least consistent with 2024 .	Active and opportunistic.
DEI and culture	N/A in Q2. Q3: ESG progress (CSA, EcoVadis) .	Emphasized DEI as value-creating and core to knowledge work and audience reach .	Continued cultural focus.

Management Commentary

“We believe 2024 marked an inflection point for the Company as it returned to revenue, adjusted diluted EPS, and free cash flow growth.” – CEO Vivek Shah .
“We just came up a touch short… roughly $10 million of revenues falling out… very unusual for us to miss our own estimates even slightly and very much view it as an anomaly.” – CEO Vivek Shah .
“Connectivity is our most exciting business… we were willing to sacrifice near-term growth for long-term gains… deprioritizing the ad business… to focus entirely on subscriptions and data.” – CEO Vivek Shah .
“Our guidance reflects an improving outlook… significant increase in connectivity’s growth… Cybersecurity and Martech will continue to improve.” – CFO Bret Richter .
On CNET integration: “We’re ahead of schedule… realized the synergies and savings… going to market as the CNET Group… delivering 5–6x purchase price over EBITDA within 12–24 months.” – CEO Vivek Shah .

Q&A Highlights

Advertising/Walled Gardens: Management expects mid-single-digit ad growth in 2025 midpoint; leadership positions in endemic verticals (tech, gaming, health) offset broader open web pressures; B2B headwinds subtract ~150 bps from tech ad growth .
M&A and Buybacks: 2025 M&A deployment at least consistent with 2024; active pipelines across all five segments; buybacks remain opportunistic with >6.2M shares still authorized .
LLM Licensing: Open to licensing at fair value for training use; patient approach amid favorable copyright rulings; current public deal sizes seen as not material .
Health & Wellness: Strong pharma upfronts; DTP headwinds easing; GLP‑1 exposure small today but synergistic with Lose It! subscriptions and anticipated ad budgets .
Connectivity/Ookla: Q4 miss tied to lumpy large deals and timing of historical data sales; reorg created some disruption but positions for scale; deprioritizing ads .
Cyber/Martech: Sequential improvement expected through 2025; return to growth targeted in H2 .

Estimates Context

S&P Global consensus (EPS, revenue, EBITDA) could not be retrieved at this time (tool limit exceeded). As a result, we cannot quantify beats/misses versus Wall Street consensus in this report. Management disclosed a shortfall versus internal expectations of roughly $10M revenue in Q4 due to Humble Games timing/underperformance, missing Connectivity deals, and an indirect tax contra‑revenue item .
Where estimates may adjust: models likely reflect slightly lower Visibility in Humble Games and lumpy Connectivity licensing, offset by stronger A&PM trends, Tech & Shopping momentum (CNET integration), and 2025 guidance midpoint implying acceleration .

Key Takeaways for Investors

Growth re-acceleration underway: 2025 midpoint guides to +5% revenue/+6% adj. EBITDA, with improved contributions from Tech & Shopping, Health & Wellness, and a stronger Connectivity trajectory .
Mix quality improving: A&PM retention at 92% and rising average revenue per advertiser point to healthier direct demand; subscription/licensing base (41.8% of revenue in FY’24) provides ballast .
Connectivity is a 2025 swing factor: Post-reorg, focus on higher-quality subscription/data revenues could normalize deal lumpiness and expand the TAM; watch bookings cadence and large deal closures .
Cyber/Martech inflection in H2’25: Maintaining ~35% EBITDA margins while revenue trends improve should support consolidated margin resilience .
Capital allocation remains a catalyst: $664M cash/investments and sub‑2x gross leverage support continued M&A and opportunistic buybacks; 2024 actions reduced convert dilution and extended maturities .
AI risk manageable near term: Low incidence of AI Overviews in key queries (12%); diversified traffic and leadership brands mitigate search disintermediation risk; AI features driving engagement in key products .
Near-term trading setup: Q1 seasonally >20% of revenue and guided “muted,” with improvement 2H‑weighted; catalysts include M&A execution, Connectivity deal flow, and evidence of Cyber/Martech H2’25 reacceleration .

Additional Data and Notes

Free cash flow cadence: Q4’24 FCF $131.1M vs $65.9M a year ago; FY’24 FCF $283.7M vs $211.2M, reflecting strong working capital seasonality and TDS contribution in Q4 .
Segment realignment: five reportable segments with five-year historical revenue provided; FY’24 adj. EBITDA margins: Connectivity ~51.5%, Gaming ~38.1%, Health & Wellness ~37.4%, Tech & Shopping ~33.6%, Cyber/Martech ~34.8% .
FY’24 GAAP items: $85.3M goodwill impairment; GAAP diluted EPS $1.42; adjusted diluted EPS $6.62 .

Sources: ZD Q4’24 8‑K and press release, investor presentation/slides, and Q4’24 earnings call transcript .

ZIFF DAVIS, INC. (ZD)·Q4 2024 Earnings Summary