Hanging in there, everyone. Last, but certainly not least, for us, this is the last session. Closing it off, the highest quality, Vivek Shah, Bret Richter from Ziff Davis, and really, really excited to have you guys here and talk about the story.
Yeah, it's great to be here.
Yeah, thank you.
Thanks for joining. I think always just a good place to start with Ziff Davis is just kind of give us a lay of the land, how things have evolved and kind of where you're at right now.
Yeah, maybe I'll just start a little bit with the origin story and then quickly get to where we are today. This company essentially was created in 2010, when I, with a private equity firm, acquired PCMag. It started, it was a $22 million deal. We had a simple thesis at the time, which was digital transformation, platform shifts create great investment opportunities, and that we thought we had an approach where we could identify really interesting companies to acquire, business model innovation, develop technology and leverage technology platforms, bring in talent, operate these businesses for free cash flow, and rinse and repeat. In the ensuing decade, from that modest start, we did that, and the business grew on a compounded annual growth basis of in excess of 20%, operating in mid-thirties margins.
The business today is roughly $1.4 billion of revenue, a split between advertising and subscriptions, and so it's been, it's been this incredible run. The last couple of years have been a little different. We've been more treading water as a company, flattish from a revenue and, and EBITDA point of view, and there are a couple of things. One is the advertising portion of our business, which is a little more than half of the business, and the market's not been, you know, it's not been a benign market for the last couple of years, and so I think that's had, you know, some impact, but we've held up. I mean, I think on a TTM basis, the ad business is down 2% for the company. Considering some of the headwinds, I actually view that as being, as being relatively good performance.
On the subscription side of the business, you know, that has been a steady grower for us, a low single-digit grower, and so the organic picture hasn't been great. Now, we also believe that the, you know, the big part of our model, obviously, is acquisitions.
Right.
The deal market and the M&A market for the last few years, could we have transacted? We could have, but we just felt that patience would be rewarded, and we believe we're now entering that period where at least that perspective is going to actually, you know, and in fact, be rewarded. Look, I think the last couple of years, the business hasn't reflected what it was in the preceding decade. We feel pretty optimistic about where things are going in terms of improving organic as well as, I think, accelerating inorganic. You know, the thing that I would also say is we...
I am sure, you know, as we talk about it, we spent a lot of time with this company talking about the advertising business, but we have a $600 million subscription business, and that business has, as I said, has done, has done really well, 3.4 million subscribers, ARPU of about 140-ish, you know, 160 a year. You know, there is a diversification in here, too, that I think sometimes is missed when we talk about the company.
Got it. Bret, anything you want to add to that?
No, I—so I've been with the business, I'm coming up on my third anniversary, and it has all the things that Vivek described that we've experienced over the last three years. You know, no need to repeat those, but just to emphasize that what we have done, and I think we'll probably get into this, is, you know, we've really maintained, if not improved, the health of our balance sheet. We've produced significant amounts of after-tax free cash flow, which accrues directly to the equity holders and the value of the equity. We've positioned ourselves to both execute the transactions that we've executed this year and in the prior year, while maintaining and creating tremendous amounts of capacity in the balance sheet to do more things.
As you know, our, you know, various businesses jump the hurdles that may have been in front of them in the last couple of years, I think we're well-positioned to really act in the M&A market as we see deals that are attractive to us, like the one we recently signed, CNET, which we signed about four weeks ago, and we're excited about what's in front of us.
Okay, great. Let's start with CNET. First major acquisition in a number of years. Talk about the attractiveness of that asset, you know, why, why it's the right place for at Ziff Davis. It's moved around a bunch over the years. What is it about CNET, and how does it fit with you guys?
Yeah, I mean, look, obviously the tech media vertical is one of our verticals, and CNET is easily the leadership brand within that vertical. Has been for a while now, and I think for us to be in a position to be in the leadership position, I think matters a lot. Part of my view of where the advertising market is going is that fundamentally, most marketers are search, social, CTV, and one to two endemics. By definition, you really want to be in a leadership position to get the direct ad programs, otherwise, you're gonna fall into the programmatic bucket. As a company, we have stayed away from programmatic monetization for the most part. The yields aren't what they're gonna be from a, you know, versus what you'd get from a direct ad sales, insertion order-based type business.
For us to continue to succeed there, it felt important that we needed the anchor brand. So that's one thing.
Okay.
The other thing I would say is that when we look at the revenue mix and the composition of our tech media business, which is PCMag, Mashable, Lifehacker, Spiceworks, versus the CNET and ZDNet, there's some complementarity there, and I think we can help accelerate some parts of their business. I think there's some real revenue synergies in the equation. I'll also say that this is an example of where patience pays off, right? This isn't the first time we looked at acquiring the asset. This is all in the public record, but, you know, this asset traded for $500 million a handful of years ago when we were looking at it.
Right.
You know, while we felt all the things I said about why this made sense were true at the time, there are limits, and we are a very disciplined buyer. Look, we'll wait. We'll be patient. What I often tell shareholders is, "Look, you know, if you're looking for that almost like clockwork, formulaic deployment of capital for acquisition, this isn't the place, 'cause we are gonna pick our time, and we're gonna pick our spot." I'm thrilled that we have the asset, and I'm actually thrilled that we have the asset at a valuation that made sense for us, which, as you know, it's very simple. We need to see IRRs in excess of 20%.
Right.
A big function of that is not just what you're gonna do with the business, but what you're paying for the business. I think this is, you know, I think this is center of the fairway when we think about the kinds of acquisitions we've historically done and the kinds of acquisitions we think we're going to be able to now do in this market environment.
Got it. Okay, let's broaden that out a little bit. You, you've been patient. CNET was the first major one we've seen in a few years.
Still relatively small in the context.
Still relatively small.
Yeah.
Right, but one of the largest one in a few years.
Yeah, almost more about what hasn't happened in the last couple of years.
That's right. Exactly. How is the world changing from here, and how is your appetite for M&A changing? Are you still being patient, or are you seeing more opportunity?
We will always be patient, right? That... But I think what has changed is, as more time has passed since valuations of 2021, I think sellers and the bid-ask spread between buyers and sellers is narrowing. That is what we have here, right? Which is, okay, we get it, what happened in 2022, 2023, this is not—this was not just temporary. We are in a cycle right now, particularly for digital media, advertising-based assets. There are a lot of... There is a bear case around content that exists, right? It affects our valuation today around what AI means, and where search is going, and the ad duopoly. We understand that. We see that.
If what that means is we're gonna be able to transact at prices that we find attractive, I guess we'll take the near-term hit there and be able to transact at, I think at, you know, at more attractive valuations. I do think there is a recognition in the market that this is a little bit of a new reality. I think you have private equity-owned assets where there is a real demand for some liquidity.
Mm-hmm.
I think the recognition that transactions need to happen, that'll be interesting. The public markets have been difficult for a lot of businesses like ours, and ourselves included, so I think there are attractive valuations there. I think you've got some businesses, you know, that are potentially in venture portfolios, and then owner/operator businesses, and saying, "Okay, if this is the reality, I don't know if I want to continue to wait, and if there's an opportunity to do a transaction, we'll do it now." I think the environment is right.
I think the CNET acquisition supports that, but then the pipeline that we have right now further strengthens my conviction that we will be back to the kind of capital deployment we saw historically, which is almost about 100% of our free cash flow every year being put back into acquisitions.
Okay, gonna get to that last comment.
Yeah
... in a second. Just first, any bias on public versus private in terms of what makes more sense in the M&A market and areas of focus, publishing, specific verticals-
Yeah
... or on the subscription side, new businesses? How do you guys think about that?
Yeah, I don't, I don't know if we have any preference as to who the owner is, right? To me, it's just, is the owner motivated to do a deal, and are they serious about a transaction? I think in all those markets, that's what we look for. In terms of the spaces in which we want to acquire, I have always had a bias to buying against the existing verticals, because the synergy cases are always stronger, right?
Right.
The risk profile is different, right? If you are acquiring in spaces in which we have existing assets, have an existing position, and all we're doing is adding scale and extracting value through synergy, that's just more comfortable. The other piece of it, the reality and the way our organization is set up, is that the sourcing of deals happens within each one of our seven verticals. Each of them is competing for capital. To some degree, Bret and I are always looking for ways to spread capital amongst the seven and not do concentrated bets between the seven.
Right.
Also, I just think that, you know, the bigger the transaction, and we're not against larger ones, we've done them, RetailMeNot, Everyday Health, which was public, I think in the end, the conviction level has to be super high, right? The bigger the purchase price, the higher that conviction level needs to be. In my own, where I sit, I'd like to feed the seven verticals. They're all very active right now in the marketplace, sourcing, evaluating, and diligencing opportunities, and I prefer to spread it around.
Okay. Any, anything to comment on, like, a pipeline, or is that not the right way to look at it?
No, I mean, listen, I think it's—there isn't a quantitative answer to that, because you could still be seeing lots of opportunity, but if they're not actionable, I don't know how—
Right
... relevant that is.
Fair.
I think from the point of view of, are we going to get transactions done in the next twelve months that will be at a pace reminiscent of what it was in the decade that preceded 2022? That's what I'm anticipating.
Okay, great. Okay, now back to the 100% of free cash flow. You've stepped up on, on the buybacks.
Mm-hmm.
In this current environment. I know your view on where, where your stock is trading, and, and the valuation and, you know, being undervalued.
Yeah.
How are you thinking about buybacks versus M&A, and maybe doing both? Also, just in the context of that valuation of, you know, stepping into your own stock versus—
Mm
... buying something that might be—you might be buying at, you know, a higher multiple.
Yeah, no, it all comes down to first and core principles, right? You know, one, the framework of capital allocation is there's four pillars. We allocate capital to our business. We do that first. We do that for OpEx and CapEx. We make sure that we have a healthy balance sheet, because capital allocation strategies are built on the back of a healthy balance sheet. Then it's a balance between external investment, which is M&A, and return of capital to shareholders, either in the form of, you know, dividends, which we don't do, we used to do, or buybacks. Buybacks are also an investment decision, as you're indicating. I mean, essentially, what we're doing is we're making an investment in a company that looks exactly like Ziff Davis, 'cause it is.
It's a fractional interest in Ziff Davis, and I think what's great about the buyback opportunity is the risk profile, because we don't know any company that we diligence better than we know our own company. That said, historically and currently, our strong bias is to find opportunities to expand the breadth and scope of our businesses and enhance their ability to serve the marketplaces they serve by acquiring, you know, companies that increase their overall scale in a business, products and capabilities, you know, technology and ideas, and thought leadership. M&A is our bias, but with our stock at the level it's at, risk-weighted, we have to allocate capital to the stock. We did it in the second quarter, we did some last year. We gave an indication we'll do it in the third quarter.
The multiple's a factor, but really what we're looking at is enhancing intrinsic value per share. You can measure intrinsic value per share by adjusted diluted EPS per share, by free cash flow per share, and if we can enhance what a fractional interest in Ziff Davis owns in terms of our current and future cash flows by buying back our stock, we weigh that against these M&A opportunities, and buying back stock's been attractive.
Okay, and to follow up, you, Bret, you've talked, hit multiple times on the strength of the balance sheet. You're under two times gross levered.
Mm-hmm
... generating a lot of cash. Do you think about leverage, whether that's both on the M&A side and/or the buyback side, or the ability to do both at the same time?
Yeah, we do. We think about it all the time, and in fact, I think it's maybe slightly under the radar, but important. In June, we expanded the size of our revolver by a quarter of a billion dollars, so we had a $100 million undrawn revolver, we now have a $350 million undrawn revolver, so sort of readily accessible capital to the extent we need that to support these capital allocation activities. It's floating rate debt. We're conscious that there's strong indications that we may be entering a declining interest rate environment, which will make that capital more attractive.
We did an important transaction with our convertibles because they were, they're these 1.75% converts were due in 2026, and we were able to do an exchange offer that reduced that maturity to about $150 million and extended the $263 million of the maturity out to 2028. Slightly higher interest rate, a high conversion price, keeping it at $100 a share. We're actively managing the balance sheet, because it's the balance sheet that supports the M&A strategy.
Right. Okay, one more on sort of the just broader, just business. Your—historically, your target growth has been half from M&A—
Yeah
...half from organic growth. Presumably, that hasn't changed—
No
... even though we've had a tough environment. Just talk about how investors should be thinking about that in the environment going forward.
Yeah, look, I think in the near term, which I'll define as, you know, sort of the next twelve months, you're probably gonna see the ratio more tilt to the inorganic side, just given the activity that I just discussed in terms of what we're looking to do. At the same time, the organic piece is gonna continue to improve. The other thing I just should say on organic is we're a portfolio of businesses. There are businesses that are growing very strong organically, and there are businesses that, while may be in organic decline, could be in EBITDA growth mode, 'cause we are shrinking to grow and doing things to rightsize the business. It depends on where they are in their ownership cycle with us.
We often look at businesses having a 12, 18, 24 month incubation period inside of a company like ours. And if you're working to enhance profitability, and as you know, we are EPS driven, really, that's our North Star. If we can do things that are gonna be accretive, may make the organic growth statistic that we report, it may be dilu- may be negative to that, we're still gonna do it, 'cause it's the right thing to do from a, from a bottom-line point of view. I would just say the ratio is probably more inorganic than organic in the next twelve months, but the long-term vision is that it's, it is an equal amount from, from both. The other thing I will say, just back to... We were talking about balance sheet.
We were talking about our borrowing capacity, we were talking about the ongoing free cash flow, but there's an existing, you know, three-quarters of a billion dollars of cash that sits on the balance sheet of the company. In all of that—
Right
...inactivity, that we've been building the war chest. When you start to add up all of that, right, the borrowing capacity, the free cash flow, the ongoing free cash flow, the existing cash-
Right
... it's a fair amount of firepower. If you go and say, "Okay, if that can be deployed in the way in which it was deployed for a decade," which is what we're saying—
Right.
Then you translate that into a model, it becomes a very attractive model, notwithstanding what, even if your organic is, you know, low single digits.
Got it, right. A lot to work with.
A lot to work with.
Okay, great. Let's talk about the ad business, and some of the dynamics going on there. There's been some puts and takes across the verticals and the businesses. Maybe just a kind of a state of the union on the ad business in particular.
You know, just as a refresher, our ad business operates in four primary verticals: technology, video gaming and entertainment, retail shopping, and health. Those are the four categories. We're not in every category. We're a vertical player, not a horizontal player. Our ad business is, as I said, largely direct ad sales versus programmatic, right? It's not a systematic monetization. It is sales force working with clients to develop programs. Heavy bias, though, towards performance-oriented programs, so things that drive a true ROAS, return on ad spend. Mostly enterprise buyers of advertising, so, you know, we're talking, you know, a couple of thousand advertisers versus a million advertisers or 10 million advertisers. There are differences between sort of our ad business and other ad businesses.
It's always helpful to just think of it vertical by vertical. The tech vertical has been difficult. It has been the source of, you know, a majority of the organic headwinds in the business, as you know. That has a lot to do with the underlying health of the advertisers themselves, and so where Big Tech goes is kind of where we're gonna go with that vertical. Within it, we have both marketers looking to reach consumers and marketers looking to reach business decision-makers. It's the business decision-maker piece that's been more problematic. The consumer piece has actually been growing. It is where CNET also operates, so we feel good about that. Gaming's been great.
Gaming continues to grow, notwithstanding the fact that the video gaming industry is actually having some challenges, the business is continuing to grow, and that's good to see, and we feel optimistic about that. Health and wellness, it's largely pharmaceutical advertising as well as, you know, 'cause of our parenting and pregnancy business, a marketer looking to get to that audience. I'd say the DTC, direct-to-consumer pharma, has been much stronger than the direct-to-provider pharma, and that has to do with the cycle of where drugs are and where do you feel you need to enhance the consumer's perception of drugs versus a provider's. Again, the pharma business, we think, is one of the best ad categories, period, within the advertising industry. Then retail, we have had headwinds there that I don't think are market.
They're very specific to us, relating to a commission challenge we have with one of our larger merchant partners, as well as a distribution deal that was a good distribution deal and incremental when we had it, and has gone away in some ways or has diminished, and that's become a source of organic decline. I don't- I view that as we're gonna lap that very soon, and that's not gonna be something we have to worry about going forward. You know, a lot going on. What I would say is, in the end, that I think we're only strengthening our position in each one of these verticals, and RetailMeNot, now CNET, IGN, Everyday Health, these are number one and two in these verticals, and these are great verticals that represent a significant chunk of the advertising industry.
Got it. For you guys, it's very kind of vertical specific.
Yes.
You don't see an overall—
No, I don't—
umbrella on the macro.
We don't have—internally, we're not talking about ad trends. It's very specifically: What's happening in this vertical? What's happening with these advertisers? Are we losing share? Are we gaining share? What does the market look like?
Got it. Okay. You've had a lot of views on Gen AI. I actually remember—I don't know if you remember our first conversation was right when ChatGPT came out—
Yeah
... and you were the first one that actually told me about it.
Yeah.
Like, "Have you seen this ChatGPT?" It was, like, the first few days that it was out.
Yeah.
A lot's evolved there. Let's start with the licensing side.
Yeah
... where you're starting to see some deals.
Yeah
... pick up between publishers and the AI providers. You've been a little bit more patient. It's another area you've been patient in. Can you talk about the philosophy there and your approach and kind of how you're seeing that play out?
I mean, listen, a lot of these deals have become public, so you know the terms. The dollars aren't really material, the terms are pretty short, and they're not gonna renew. What do you get in exchange? You get a little bit of cash. I have cash. We have cash right now. You give up some rights, and I wouldn't wanna give up those rights because I think fundamentally, and this is gonna have to get litigated, is the input into these systems matters. What you're gonna hear is, "Oh, it's all about the output. We didn't make a reproduction, so if we didn't make a reproduction, we're fine." We don't think that's correct. We believe that it is a violation of copyright.
It is not fair use to ingest the entirety of our library of content without any compensation, in violation of our terms of service. We have major LLMs. We have robots.txt instructions to not crawl, and they're still crawling. We also know we are one of the largest providers of the original training for these large language models. My view is, it's not attractive enough right now, from what we're seeing, and I'd rather maintain my optionality.
Okay, but you haven't taken the litigation approach either as well, correct?
I'm not gonna get into where we are in the legal process, but I will say that I believe this will need to be resolved in the courts.
All right, we'll leave it there. One of the debates also has been, and you've talked about this, the quid pro quo of the internet, right? The way search has always worked, it can take your content if it's driving traffic back to you, and there's been concern about what AI Overviews—
Yeah
... and Gen AI search does for that exchange.
Yeah.
I think in the past you've talked about how you haven't seen—well, actually, in the past you've talked about how it potentially is driving more traffic, so—
Correct.
How is that going? Has that changed? What are you seeing there?
Look, the rate at which AI Overviews appear across really all queries, but also the queries that are valuable to us, is around 7-8%. So 90+% of times, AI Overviews are not even appearing. You could say, "Why is that?" I think part of it is, does the AI Overview contribute to the SERP, to the search engine result page, or not? I think there are queries for which it can and will, and there are queries for which it will not, and we are gonna watch that. As a rate in terms of how often it is happening, it is actually not material. When it does happen, because there are links built into it, there is an argument that that is actually good, because those links have the highest value real estate on a search engine result page.
They're often sitting above the ads.
Right.
Right? The thing that you often hear publishers complain about is that the search engine result page has become dominated by advertising. The degree to which AI Overviews actually elevates content and links to content above or adjacent or in a better position against the advertising, that's actually gonna be good. Again, who says that the AI Overviews are always gonna be presented there? We don't know. It's early days. I would say I think a lot's been made of the incorporation of AI Overviews into the search experience, and I don't see it as a harmful dynamic for publishers. There's a different question, and I think it's the probably more important question in some ways, which is: Does Google's position in search somehow change because now there are competing engines?
Up until AI, no one talked about competing search engines. Now we're talking about SearchGPT and Perplexity, and every day there's a new... There's now this view that we don't need an army of 5,000 engineers to manage an algorithm. We can have an AI actually perform the work of the algorithm, which is to present content, present the links, to organize the internet's information. The cost to being in the search business has come down significantly. I think there's gonna be a lot of search comps.
Already a pretty good margin business.
It's a great margin business, but I think competition in search is good. I think that's good for every participant in the ecosystem, so I encourage competition. I also believe that one of the ways in which large language model owners can resolve the copyright conflict is deliver what Google delivers, which is a large quantum of traffic. You may find that LLMs will build search engines just to do that and not build an ad business, because the economic—the incentive is, "Okay, I can now go build my AI business, and I'm getting the ingesting of content that I need because I'm delivering the value exchange of traffic for content." That will be interesting, and that could be an ultimate resolution, by the way, if they can get to any materiality.
What I will say is that, you know, it is hard, right? I mean, you know, Google has a very strong position within search. I will say this about Google, that I firmly believe, yes, the algorithms change, and publishers either benefit or do not benefit from the change, and can have some difficulty trying to manage that. Google as a platform versus other platforms, I think has been far more reliable and thoughtful about content than pretty much anyone else. You know, there have been other platforms that people built entire businesses around, gone away.
Right.
Right? Algorithm changes. If you look at the social platforms, they no longer are drivers of traffic. The social platforms keep you within the experience.
Right, and that's the concern on Search.
It is, but I don't think—I don't think in the end Search is doing the same thing. It's organizing the internet's information.
Right.
That, I think they're different, but again, I don't think Google is going to try to create the thing that people just come to and never leave. I don't know what ad business that's gonna be for them.
Right.
Look, I... You know, I told this early on. I remember when Alexa and voice, you know, those speakers came out. I literally had people saying, "Why would anyone do text-based search anymore? We're all gonna do voice search.
Yeah, I remember.
Voice search is the future.
I remember that, too. Yeah.
You guys are done.
Yeah
... because there's no way of translating voice search into traffic.
Right.
That hasn't happened.
If that quid pro quo stays and you see more AI Overviews, and, assuming it stays in this format, right?
Yeah.
Top of page.
Yeah
... above the ads, you're getting linked, and it's driving traffic. Does that satisfy your concerns on what you talked about legally, or is this—
I don't have concerns with Google.
Got it.
My concerns are not with Google.
Okay. All right. The other side of Gen AI is on how you can utilize it to create content for yourself-
Yep
... or, you know, help create content. What's your philosophy on that? Are you using it at all, and how's that?
No, we're not using it to produce content, 'cause fundamentally, that's, you know... A big chunk of what we do is to produce content that, that humans produce, and I think that's our value proposition, and we certainly don't want to threaten that in any meaningful way or in any way. Where I think it's very valuable is functionality, tools, and actually software development. The role that AI is playing inside of our company in terms of speeding how we code and deploy features and functionality across both our content and software businesses is compelling. It is less talked about for some reason, but to me, it's an engineering coup. It is a speeding of getting things, releases pushed and come to market. That's where I'm most excited about leveraging AI inside of the company.
It also is helpful, I think, to some degree, in us better monetizing—so let's take our Ookla business, which is a data business, essentially. Leveraging AI within that data business to make that business better and to create better insights and get, you know, more actionable activity out of it, that's also there.
That, is that happening today?
Mm-hmm. No, I mean, we've got AI incorporated and AI enabled across the board. I think we have 75 different products right now that are... or features, product might be too steep, but, like, functionality within our properties. Yes, that's all, but that's to me, better user experience, better functionality, faster coding, but it's not content generation. We're not doing stories.
Okay. Last one on publishing, and Google, just on the evolution around cookies—
Mm-hmm
... and the debate about what it actually ends up looking like. Any thoughts or approaches to a post-cookie world or-
But again-
What that's gonna be?
I mean, I think we, I mean, I don't, I can't tell you how many rooms I've been in like this for the last few years, where we're talking about this, third-party cookie, and, and now look.
Yeah. Right.
Right?
Right.
Like, I just... you know, my view is this: that in the end, you're talking about ad targeting. It doesn't matter the mechanism. There will always be ad targeting. There are too many smart people with too much of an incentive to ensure that the right ad gets in front of the right person at the right time. That'll never change. I never thought that the, you know, third-party cookie deprecation was gonna be some, you know, apocalyptic kind of thing.
Right.
I never thought that. In the context of our business, it wasn't even that germane, right? Because for us, our advertising is informed by context, what's on the page.
Right
... and our own first-party data. What we are not is a company that is taking data from outside of our network and bringing it in to target our advertising, or conversely, taking data from our network and monetizing it out of our network. That is not the business model we're in. There's some around-the-edges stuff that goes on, I'm sure.
Right
... inside the company, but that's not our business. Even there, it wasn't that relevant. All to say that, you know, I think we spent a lot of time as an industry talking about this, and, you know, Google's like: "Okay, we're, we're not gonna do that.
Yeah. I wanna see if there's any questions from the audience. Got one in the back here.
You mentioned that you think Gen AI deal rights won't renew. Can you maybe just elaborate on that, help us understand your thought process there?
You know, I just, my own experience, and there have been many of these over the years, you'll see some of the large social platforms all did content deals. What they do in the near term is, I think they quiet the noise enough, and then it gets to scale where they just do not need to do it. If you look in the history of a lot of platforms, you're gonna see, maybe I've just been in the business too long, but in the 30 years I've been here, I've seen a bunch of these, and, you know, I think they would have signed longer term contracts than two years, three-year contracts if this was long term. These contracts are also not for rights. They're basically releases.
API, maybe it's, "Hey, I'm getting an API access," but it's not a concession that they actually need to pay for the intellectual property. It's an important distinction. I could be wrong. I'd like to be wrong. I'd like to believe that these are gonna be larger and growing and have the kind of economics that could be material. Inside of a company like ours, you know, seven-digit, eight-digit, $1.4 billion of revenue, it just doesn't... It's not gonna move our needle, and I worry that the pressure for us to get real value goes away when it's like: "Look, we've done this. Pipe down for three years," and three years is an eternity in the technology business. My own view is, it's just not worth it.
Will there be, I think, ongoing data deals for data that cannot be otherwise accessed? Yes. We're not about to pull our entire library off the internet in support of that, because even those deals aren't that big. That's, you know, it's, it's—I don't know. No one knows, right? I can't really predict the future, but I don't know. I feel like I've seen enough of these, and I get the tone, and obviously, we're in the room, right? You sit there and you go: Oh, I don't think the goal is to admit that they should have to pay. It's to, you know, continue to just, you know, let's get—let's, let's shut some people up.
Interesting. Thank you.
Good question, good answer. Okay, we have a few minutes left. We—
I think we have a—
Yeah.
Oh, yeah, go ahead. Yeah, sure.
Yeah, I just wanted to ask about, you know, Reddit's public now. There's a lot of talk about them getting all of this traffic from Google and the deal they did. Just a lot of the endemic advertisers that might be on CNET or PCMag, they might now be on Reddit as well, or any of these other sort of forum-based that, you know, fill a need that's similar to what you do. It's very intent and all these sorts of things. Just wondering how you view, you know, competition from very professionally created content with more forum or, you know, sort of Reddit-like content that competes with you?
You're asking the right question. That- so, 'cause I get a lot of the AI, what, what AI Overviews. I'm like, "Forget AI Overviews, Reddit's in the middle of the page now on every query!" Like, this is, this is changed. My sense is it's, it's, it's, it's this phase, and we'll see where it settles, where I believe that Google saw how many people put in queries and put in the word Reddit next to it, which signals to them people wanna know what, that the consumer comment is. I think they can coexist. Look, I, I myself find myself on Reddit. I see value in it. I don't think it's... I think when you're in any research, purchase process, decision process, you need to do something, you're going on the internet to figure things out, you want multiple sources.
You want professional sources, and you want user content, user comments. I think Reddit's become a really good commenting engine. I think where it ends up settling out in terms of the placement it gets, the frequency with which it gets placement in Google, I think is gonna be an evolution. I also think there's an opportunity for publishers to be on Reddit, Reddit as a platform. Reddit is now emerging as a platform for publishers, and that could be also interesting. It is early days. I actually would agree with you that I actually think the Reddit change within the SERP is actually more impactful, and more interesting to watch than even the AI Overviews.
Great. Okay, we have about a minute left. We hit on publishing and advertising a lot. Mentioned Google on the subscription side. We didn't get-
Yeah, there we go. I told you, I told you we'd never get to talk about the-
We didn't get to it much. Maybe just broadly, what part of that business excites you the most? I-
Yeah
... I think it'd be interesting to hear from you and from Bret also.
I'll let Bret go first.
Yeah, I think it actually hits upon a word that we really didn't have an opportunity to speak about today, which is while we generate revenue a lot of different ways, I think what's underappreciated is the diversity of our revenue. In a period of time, particularly the last few years and in 2022, when the ad market was under significant pressure, the fact that we generate 40%-45% of our revenue from subscription and licensing differentiates us from a lot of different companies and a lot of different platforms. In some ways, the flip side of the fact that we're in a number of different businesses, serving a number of different communities in a number of different ways, is the de-risking element of the diversity and the recurring element of our subscription and licensing business.
Great.
Got nine seconds. I can't improve upon that.
Yeah. You've got four seconds.
I would just say that I love the durability. I love the growth. I think each—I love the concept of subscription revenues more than anything else.
Got it. Great. Thanks, guys.
Thank you.
Appreciate the time. Thanks, everyone, for joining.