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01/11 04:03
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance across most segments, with notable revenue growth and positive adjusted EBITDA figures. The Q&A section addresses potential concerns, such as margin contraction, with management providing reasonable explanations. The company's proactive approach to AI and legal actions against OpenAI, alongside new product developments, also supports a positive outlook. Despite some uncertainties, the overall sentiment is positive, with strong growth in key areas and reaffirmed guidance, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
Revenue Q2 2025 revenues were $352.2 million, compared to $320.8 million in the prior year period, reflecting growth of nearly 10%. This growth was attributed to both organic growth and contributions from recently acquired businesses.
Adjusted EBITDA Q2 2025 adjusted EBITDA was $107.7 million, compared to $96.3 million in the prior year period, reflecting growth of nearly 12%. This increase was driven by higher revenues and operational efficiencies.
Adjusted EBITDA Margin The adjusted EBITDA margin for Q2 2025 was 30.6%, reflecting strong profitability.
Adjusted Diluted EPS Q2 2025 adjusted diluted EPS was $1.24, compared to $1.18 in Q2 2024, reflecting growth of more than 5%. This increase was driven by higher adjusted EBITDA and lower fully diluted shares outstanding, partially offset by foreign exchange rate changes.
Advertising and Performance Marketing Revenue Q2 2025 advertising and performance marketing revenue grew 15.5% year-over-year, driven by strong demand across various segments.
Subscription and Licensing Revenue Q2 2025 subscription and licensing revenues grew by 5% year-over-year, reflecting steady growth in this revenue stream.
Tech & Shopping Segment Revenue Revenues grew by over 11%, with adjusted EBITDA growth of over 5%. Growth was supported by the CNET acquisition and improving trends in the B2B business.
Gaming & Entertainment Segment Revenue Revenues grew nearly 8%, with adjusted EBITDA growth of almost 24%. Growth was driven by the success of IGN Live and increased engagement across platforms.
Health & Wellness Segment Revenue Revenues grew nearly 16%, with adjusted EBITDA growth of 11%. Growth was driven by strong performance in pharma commercialization services, medical education, and consumer health businesses like Lose It!.
Connectivity Segment Revenue Revenues grew over 14%, with adjusted EBITDA growth of over 12%. Growth was driven by strong demand for key products like Speedtest and expansion in emerging markets.
Cybersecurity & Martech Segment Revenue Revenue declined less than 1%, but adjusted EBITDA grew over 5%. Growth in adjusted EBITDA was driven by product enhancements and new partnerships in the VPN business.
Free Cash Flow Q2 2025 free cash flow was $26.9 million, 7.5% higher than the prior year period. Trailing 12 months free cash flow was $233 million, nearly 27% higher than the prior trailing 12-month period.
Spiceworks Cloud Help Desk Software: Launched a paid subscription version with over 20,000 paying business customers.
VIPRE Integrated Email Security: Introduced an AI-powered email security solution for SMBs, integrated with Microsoft 365.
Lose It! App: Enhanced with AI-powered voice and photo meal logging, improving user engagement and weight loss outcomes.
CNET and Best Buy Partnership: Renewed partnership allowing cross-selling of media inventory and featuring CNET content in Best Buy's retail touchpoints.
IGN Live Event: Expanded global reach with 300 million fans, 91% growth in reach, and 26% growth in video views year-over-year.
Connectivity Segment Expansion: Growth in emerging markets (EMEA and APAC) and increased demand for Speedtest and RootMetrics services.
AI in Customer Service: Deployed AI chatbot at RetailMeNot achieving a 50% case deflection rate.
AI in Advertising: Developed AI platform for precise audience segmentation, enhancing advertiser engagement.
Acquisitions: Completed 5 tuck-in acquisitions in H1 2025, including Well+Good brand and two in Cybersecurity & Martech.
Stock Repurchase: Repurchased nearly 1.4 million shares in Q2 2025, reflecting confidence in undervalued stock.
Cybersecurity & Martech Segment Performance: The Cybersecurity & Martech segment experienced a revenue decline of less than 1% in Q2 2025, indicating challenges in achieving growth. Although there is optimism for growth in Q3, the segment's underperformance could impact overall company growth.
Foreign Exchange Rate Impact: Changes in foreign exchange rates negatively impacted Q2 2025 EPS by approximately $0.10 per diluted share, highlighting exposure to currency fluctuations.
Humble Games Publishing Decline: The 'Other Revenues' category saw a decline of $2.2 million year-over-year, primarily due to reduced contributions from the Humble Games Publishing business, signaling challenges in this area.
Stock Trading Levels: The company perceives its stock trading levels as undervalued, which may reflect market skepticism or lack of confidence in the company's performance or strategy.
M&A Integration Risks: The company has been active in acquisitions, deploying over $50 million in the first half of 2025. While this strategy aims to enhance business capabilities, it carries risks related to integration and achieving expected synergies.
Economic and Market Conditions: The company's guidance range reflects uncertainty in economic and market conditions, which could impact revenue and profitability projections.
Revenue Growth: The company anticipates at least mid-single-digit revenue growth for both Q3 and Q4 2025, with Q4 potentially being stronger than Q3. Full-year 2025 revenue growth is projected to exceed 7%.
Adjusted EBITDA Growth: Full-year 2025 adjusted EBITDA growth is projected to be nearly 10%, with stronger growth expected in Q4 compared to Q3.
Adjusted EPS Growth: Full-year 2025 adjusted EPS growth is projected to be 10%, with potential impacts from foreign currency fluctuations and other factors.
Health & Wellness and Connectivity Segments: These segments are expected to be the largest contributors to growth in the second half of 2025.
Cybersecurity & Martech Segment: This segment is expected to return to revenue growth starting in Q3 2025.
Capital Allocation: The company plans to continue its M&A program and stock repurchase strategy, with over 4 million shares remaining under its repurchase authorization.
Share Repurchase Program: Ziff Davis has been actively repurchasing its common stock. Since the beginning of the second quarter, the company repurchased nearly 1.4 million shares. Over the past year, more than $170 million has been deployed to repurchase over 4 million shares, representing approximately 10% of the company's outstanding shares. The company has more than 4 million shares remaining under its stock repurchase authorization. Management believes the current trading level of the stock does not reflect the intrinsic value of the underlying businesses and plans to continue repurchasing shares while maintaining capital for M&A activities.
The earnings call summary indicates steady growth across various segments, with a notable 35% increase in free cash flow. The Q&A section highlights management's openness to strategic opportunities, including potential divestitures and M&A, which suggests proactive capital allocation. Despite some uncertainties around AI impacts and market dynamics, the company's strong cash generation and shareholder return plans, including stock repurchases, support a positive outlook. Given the market cap, the stock price is likely to see a moderate positive movement of 2% to 8% over the next two weeks.
The earnings call reveals strong financial performance across most segments, with notable revenue growth and positive adjusted EBITDA figures. The Q&A section addresses potential concerns, such as margin contraction, with management providing reasonable explanations. The company's proactive approach to AI and legal actions against OpenAI, alongside new product developments, also supports a positive outlook. Despite some uncertainties, the overall sentiment is positive, with strong growth in key areas and reaffirmed guidance, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
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