Ziff Davis, Inc. ((ZD)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Ziff Davis, Inc. recently held its earnings call, revealing a balanced sentiment of optimism and caution. The company showcased consistent revenue growth and strong performances in segments like Health & Wellness and Cybersecurity & Martech. However, challenges were evident in the Tech & Shopping and Gaming & Entertainment sectors, alongside a slight dip in adjusted EBITDA. The ongoing strategic review process, while potentially beneficial for shareholders, introduces an element of uncertainty, balancing the positive highlights with notable challenges.
Revenue Growth in Third Quarter
Ziff Davis reported a nearly 3% increase in revenues for the third quarter, marking the fifth consecutive quarter of revenue growth. This consistent upward trend underscores the company’s ability to maintain momentum despite market challenges.
Health & Wellness Segment Performance
The Health & Wellness segment stood out with a remarkable 13% year-over-year revenue growth and an 18% increase in adjusted EBITDA. These figures represent significant achievements for the division, highlighting its strength within the company’s portfolio.
Cybersecurity & Martech Segment Turnaround
The Cybersecurity & Martech segment returned to growth in the third quarter, with a 2% increase in revenue. This turnaround was driven by strong performances in consumer VPN and cloud backup services, signaling a positive shift in this segment.
Humble Bundle Performance
Humble Bundle experienced its best quarter of the year, achieving the second highest revenue quarter in the last five years. Subscription revenues increased by 5% year-over-year, showcasing the platform’s growing appeal.
Share Buybacks and EPS Growth
Ziff Davis increased its share buybacks, which contributed to a 7% growth in adjusted diluted EPS. This move reflects the company’s commitment to enhancing shareholder value.
Decline in Tech & Shopping Segment
The Tech & Shopping segment faced a 2% drop in revenue and a 12% decline in adjusted EBITDA, largely due to the wind-down of game publishing activities. This decline highlights the challenges faced in this sector.
Gaming & Entertainment Revenue Decline
Gaming & Entertainment revenues decreased by about 4% year-over-year, primarily due to timing issues with title releases. This decline points to the volatility and timing challenges inherent in the gaming industry.
Adjusted EBITDA Decline
Adjusted EBITDA slightly fell by less than 1% year-over-year in the third quarter of 2025. This minor decline indicates some pressure on the company’s overall profitability.
Connectivity Segment Timing Issues
The Connectivity segment’s adjusted EBITDA margin was negatively impacted by the timing of contracts and investments in new products, reflecting the challenges of aligning product launches with market demand.
Uncertainty in Strategic Review Outcomes
The ongoing strategic review aimed at unlocking shareholder value has yet to result in any transactions, creating uncertainty about the company’s future structure. This uncertainty poses potential risks and opportunities for the company.
Forward-Looking Guidance
Ziff Davis reaffirmed its broad guidance range for fiscal year 2025, set in February. The company expects key financial metrics, including revenues, adjusted EBITDA, and adjusted diluted EPS, to fall within this range. However, due to momentum not broadly carrying forward from Q2, they anticipate fiscal year 2025 total revenues and adjusted diluted EPS to be within the lower half of the guidance range, with adjusted EBITDA closer to the lower end. The fourth quarter is expected to be the seasonally largest revenue quarter, with Q3 2025 revenues reported at $363.7 million, marking nearly 3% growth year-over-year.
In conclusion, Ziff Davis, Inc.’s earnings call presented a mixed sentiment of growth and caution. While the company continues to achieve revenue growth and strong performances in certain segments, challenges and uncertainties remain, particularly in the Tech & Shopping and Gaming & Entertainment sectors. The strategic review process adds an element of unpredictability, but the company’s commitment to shareholder value through share buybacks and EPS growth remains evident.