Ziff Davis, Inc. (ZD) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: negative revenue trends in Tech & Shopping and flat overall Q1 growth are concerning, but optimism in other segments and strategic initiatives offer some balance. The Q&A reveals management's focus on AI and strategic acquisitions, yet also highlights competitive pressures and vague responses. While free cash flow improved, the negative value remains a concern. Given the company's mid-cap size, the market reaction is likely to be muted, resulting in a neutral stock price movement prediction.
Key Financial Performance
Revenue Q1 2026 revenues were $267.6 million, reflecting a decline of 1.9% compared to $272.8 million in Q1 2025. The decline was driven by a 13% drop in Tech & Shopping revenue, offset by nearly 3% growth in other segments.
Adjusted EBITDA Q1 2026 adjusted EBITDA was $63.4 million, down from $71.4 million in Q1 2025. The adjusted EBITDA margin declined by 2.5 percentage points to 23.7%, compared to 26.2% in Q1 2025. This was due to revenue mix shifts and lower revenue in certain segments.
Adjusted Diluted EPS Q1 2026 adjusted diluted EPS was $0.73, compared to $0.77 in Q1 2025. The decline was partially offset by a year-over-year drop in shares outstanding due to the active buyback program.
Advertising and Performance Marketing Revenue Q1 2026 advertising and performance marketing revenue declined by 5.1% year-over-year, reflecting pressures in affiliate commerce and programmatic display advertising.
Subscription and Licensing Revenue Q1 2026 subscription and licensing revenues increased by 1.9% year-over-year, driven by growth in certain subscription-based services.
Tech & Shopping Segment Revenue Revenue declined by 13% year-over-year due to traffic pressures impacting affiliate commerce and programmatic display advertising. Growth in off-platform monetization, licensing, and sponsored content partially offset the decline.
Gaming & Entertainment Segment Revenue Revenue increased by over 7% year-over-year, driven by a record quarter at Humble Bundle and significant growth in subscription and performance marketing revenues.
Health & Wellness Segment Revenue Revenue increased slightly year-over-year, supported by strong consumer pharma ad revenues and record Q1 revenues from the AI-powered weight and nutrition management app, Lose It!, and the PRIME continuing medical education business. However, declines in MedPage Today bookings and traffic-related programmatic revenues in pregnancy and parenting offset some of the growth.
Cybersecurity & Martech Segment Revenue Revenue grew nearly 4% year-over-year, driven by strong performance in the cybersecurity business and enhancements to digital security offerings like IPVanish's Threat Protection Pro.
Free Cash Flow Q1 2026 free cash flow was negative $3.2 million, an improvement from negative $5 million in Q1 2025. The improvement was attributed to better working capital management.
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Operating Highlights
AI-powered weight and nutrition management app: The app, Lose It!, posted record Q1 revenues, showcasing its success in the Health & Wellness segment.
Threat Protection Pro: IPVanish released this feature to provide always-on malware protection, enhancing its cybersecurity offerings.
PhishProof by VIPRE: Launched a native product integration with Docebo, enabling real-time behavior-based risk reduction through targeted security training.
Social video views growth: The shopping group achieved over 75% year-over-year growth in social video views across Instagram, YouTube, and TikTok.
Cleveland Clinic partnership: Secured a long-term extension with Cleveland Clinic, which has the highest traffic among digital consumer health brands.
AI-driven software development: AI is now central to the development process, accelerating innovation and delivery, reducing costs, and enabling broader product roadmaps without scaling engineering headcount.
Stock buyback program: Repurchased approximately 1.2 million shares in Q1 2026, deploying $51.6 million, with continued active buybacks planned.
Connectivity business sale: Announced the sale of the Connectivity business to unlock shareholder value, with expected closure in the coming months.
Acquisition strategy: Acquired brands like Popular Science, Dwell, Domino, and Business of Home to enhance portfolio value.
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Risk or Challenges
Market Valuation: The market is assigning a low multiple to the adjusted EBITDA of Ziff Davis' portfolio, undervaluing its better-performing businesses due to their association with underperforming ones.
Tech & Shopping Segment: This segment is facing continued traffic pressures, leading to declines in affiliate commerce and programmatic display advertising revenues.
Health & Wellness Segment: Revenue growth is limited due to booking delays with key pharma clients and traffic-related declines in programmatic and affiliate commerce revenues in the pregnancy and parenting category.
Cybersecurity & Martech Segment: Margins are declining due to revenue mix shifts among Martech offerings.
Economic Uncertainty: The company is not providing annual guidance for fiscal 2026 due to ongoing exploration of value-creating opportunities, reflecting uncertainty in financial projections.
Operational Efficiency: The sale of the Connectivity business, which had the highest adjusted EBITDA margin, will impact overall company margins, requiring new approaches to maintain profitability.
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Guidance & Outlook
Tech & Shopping Segment: Sequential revenue decline is expected to improve, with each successive quarter in 2026 anticipated to be better on a year-over-year basis.
Gaming & Entertainment Segment: Continued growth expected, driven by subscription and performance marketing revenues, as well as innovative tools like Map Genie and audience insights from IMAGINE.
Health & Wellness Segment: Momentum expected in hospital media network and AI-powered tools like HALO and Lose It! MedPage Today bookings are improving for the balance of the year.
Cybersecurity & Martech Segment: Continued growth anticipated, supported by enhancements like Threat Protection Pro and VIPRE Security's integration with Docebo.
AI Integration: AI is expected to become a structural source of operating leverage, accelerating product development cycles and reducing costs.
Financial Position: The company aims to return to year-over-year revenue growth in the second half of 2026, with stronger performance in Q4 compared to Q3. Adjusted EBITDA margins are expected to improve in the second half of 2026.
Capital Allocation: Focus on active monetization of assets, disciplined acquisitions, and significant stock buybacks to enhance shareholder value.
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Shareholder Return Plan
Stock Buyback Program: Ziff Davis has been actively repurchasing its stock as part of its shareholder return plan. During Q1 2026, the company repurchased approximately 1.2 million shares under a 10b5-1 plan, deploying $51.6 million for share repurchases, including $6.7 million related to stock-based compensation net share settlements. Since April 1, 2026, an additional 560,000 shares have been repurchased in the open market. Cumulatively, since the start of the buyback program in mid-2020, over 15 million shares have been repurchased. The current authorization allows for the repurchase of approximately 9.7 million more shares. The company plans to continue being an active repurchaser of its stock, although there may be periods when repurchases are paused due to ongoing reviews of potential value-creating opportunities.
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Key Q&A
Q:Can you elaborate on the progress and initiatives of your off-platform strategy for digital properties?
A:The company has seen success in monetizing social media platforms like Instagram, TikTok, Snapchat, and Facebook, leveraging significant follower counts for ad revenue. Video content, particularly on IGN's YouTube channel, is also a key focus. Partnerships with organizations like Cleveland Clinic and Mayo Clinic for exclusive advertising monetization, as well as other channels like email, apps, and CTV, are part of the strategy. However, challenges remain in replacing organic web traffic, especially affiliate commerce-oriented traffic, and dealing with platform revenue-sharing dynamics.
Q:Is the shift in capital allocation strategy permanent or temporary?
A:The company views asset monetization as an ongoing tool, influenced by the public market value of EBITDA. If public market values recover, they may hold assets longer, but the portfolio will remain dynamic and optimized for shareholder value.
Q:Can you provide more details on MedPage bookings and competition in the HCP space?
A:MedPage faced a tough Q1 due to timing issues and specific advertisers not booking. Improvement is expected in Q2 and beyond. The HCP space has seen new entrants, adding inventory to a previously tight market. While the consumer side performed well, the direct-to-provider side faced challenges. The continuing medical education business (PRIME) continues to perform well despite these challenges.
Q:How does the company approach strategic reviews and potential transactions for business segments?
A:The company aims to enhance per-share value and remains open to various transaction structures. Decisions are based on the implied value of the business compared to private market value, with a focus on realizing value gaps efficiently.
Q:What is the company's view on social media as a traffic source and the role of AI in product development?
A:The company sees significant consumer engagement off-platform, with monetization opportunities now well-established. AI is central to product development, accelerating product pipelines and unlocking revenue. AI has shifted from being a 'copilot' to the 'pilot,' driving faster product and engineering development.
Q:How has the internal use of AI evolved, and what is its impact on operating margins?
A:The company has seen advancements in AI tools and capabilities, fostering an AI-forward mindset among employees. AI is expected to improve margins by either reducing costs or accelerating product development. Despite challenges with high-margin revenue being replaced by lower-margin businesses, the company remains focused on free cash flow and margin improvement.
Q:What was the rationale behind the acquisitions of Popular Science, Dwell, Domino, and Business of Home?
A:The acquisitions were driven by the value of established brands like Popular Science and their alignment with existing business segments. The home and lifestyle brands have strong social footprints, offering opportunities for social monetization and product development. The acquisitions were also attractively priced, presenting a unique opportunity in the current market.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the question about the ability to neatly carve out whole business segments during strategic reviews. The response was vague, focusing on general transaction possibilities and value realization without providing specific details or clarity on the likelihood of such carve-outs.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI center
AI way
AI weight
Docebo
IPVanish
MedPage Today
Richter Chief
Today booking
VIPRE
advertising partner
affiliate commerce
audience
business headwind
business portfolio
credit
cycle
development
engineering
harbor language
malware
map
monetization
opportunity value
portfolio business
pressure
process
protection
pursuit
record revenue
response
return
sale Connectivity
security
stock price
team
tool
week
work
ZD Transcript
Ziff Davis, Inc. (ZD) Q1 2026 Earnings Call Transcript
Unknown5-8
The earnings call presents a mixed picture: negative revenue trends in Tech & Shopping and flat overall Q1 growth are concerning, but optimism in other segments and strategic initiatives offer some balance. The Q&A reveals management's focus on AI and strategic acquisitions, yet also highlights competitive pressures and vague responses. While free cash flow improved, the negative value remains a concern. Given the company's mid-cap size, the market reaction is likely to be muted, resulting in a neutral stock price movement prediction.
Ziff Davis, Inc. (ZD) Q4 2025 Earnings Call Transcript
Unknown2-24
The earnings report shows mixed results: positive revenue growth in key segments and a significant share repurchase program, yet challenges in Tech & Shopping and a declining ad market. The Q&A highlights efforts to offset traffic declines and maintain margins. Despite optimistic guidance and strategic initiatives, the reaffirmed lower-end guidance and uncertainties in certain segments balance the overall sentiment. Considering the company's market cap, the stock is likely to remain stable, with a neutral impact on the stock price over the next two weeks.
Ziff Davis, Inc. (ZD) Presents at UBS Global Technology and AI Conference 2025 Transcript
Neutral12-3
Ziff Davis, Inc. (ZD) Q3 2025 Earnings Call Transcript
Positive11-7
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.
ZD Slides
ZD Report
Frequently Asked Questions
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