All right. Good morning. Thanks everyone for joining. We're excited to have Ziff Davis for our first fireside at the TMC conference. Vivek and Bret, thank you for joining us.
It's great to be here.
Thank you.
All right. Just to level set for everyone in the room and on the phone, you know, Vivek, could you start with a quick history of how Ziff Davis has evolved over the years, and then an overview of where the portfolio stands today?
Yeah, sure. Ziff Davis is actually celebrating its 100th anniversary next year. The company has a long and storied history. I'd say that the current chapter really started in 2010 when I along with a private equity firm here in Boston called Great Hill Partners, acquired what was essentially a company that had just come out of bankruptcy. It was Ziff Davis. The only asset that existed inside of the company at the time was PCMag. We acquired the business for a little over $20 million. In a two-year hold period, we really transformed the business, did a couple of tuck-in acquisitions and sold the business for almost 4 x our invested capital two years later to J2 Global.
J2 Global, which as you know is the predecessor to this company, essentially financed us for the next decade to continue doing what we had done, which is to identify businesses where we thought we could transform them and unlock an immense amount of value. In that decade, we probably consummated over 70 transactions and really built up the business to the point where in 2021 we saw an opportunity to spin off the original J2 business into a public company, which is now called Consensus, CCSI, and that was a $2 billion spin-off. You know, over the last few years, the market has been tough for the business, and the multiple attached to our ratings has compressed significantly. A lot of our capital allocation over the past few years has been in share buybacks.
We've bought in about 25% of the company in that period of time. More recently, a couple of months ago, we announced the sale of one of our segments, which I know we'll talk about, our Connectivity business to Accenture for $1.2 billion. On a go-forward basis, the four remaining reportable segments, I'll talk about each of them very briefly, map very much to acquisition themes that have influenced and guided each of those segments. We start with the Tech and Shopping segment that consists of CNET and PCMag, the original acquisition, Mashable, RetailMeNot, and just a whole host of properties that are really trying to help inform purchase decisions, very intent-driven, participating essentially in e-commerce. That's what we look to do. The thesis there is really e-commerce enablement.
We have our health and wellness segment, goes to market as the Everyday Health Group. Inside of that, Everyday Health, and we have MedPage Today, and we have Lose It!, and we have theSkimm and a series of properties that are around the digitization of healthcare, the digitization of pharma commercialization, sort of the consumerization of healthcare. That's the Everyday Health Group. We have our gaming and entertainment, segment, which is IGN, Humble Bundle and Gamer Network, and very much around the belief that video gaming is the fastest-growing and I think most durable form of entertainment and organizing ourselves around that market. Finally, our cybersecurity and MarTech segment, where we have a few theses at play. One is a consumer privacy, thesis, and that builds around our VPN businesses.
A second is just around SMB security and providing SMBs the kind of security that the enterprise gets from a cyber point of view. The last is around marketing technology and the recognition that paid marketing has gotten really expensive, very hard for a lot of SMBs to really participate. How do we help them with earned media, email, SEO, ways in which they can get their marketing messages out cost effectively? So that is the company today, and as you know, it evolves, and it'll evolve more, I guess, as we look at monetization of assets along with our continued M&A.
Well, on the evolution topic, you are in the middle of a strategic review. That might not be the exact words that you guys use, but something along those lines. Maybe talk about the rationale for doing that and then where you're at in that process.
I mean, the rationale is pretty simple. You know, the per share price of the company has been under an immense amount of pressure. The public markets haven't been, you know, valuing the portfolio in the way we would like to see. We have identified opportunities to, you know, engage in dialogue around unlocking some of that value. You know, that's what brought it on. What actually precipitated it was when we moved to five segments from our segment reporting. We used to have two, we moved to five. That provided more visibility into the company. Really, the design there was so that public market investors would have a better appreciation of what's inside the portfolio and the relative growth rates and margin profile, et cetera.
What happened instead was we just got a lot of inbound calls. We, you know, we organized around that. We've been very transparent about being open-minded. What I would say is process may be the wrong word because as I said, you know, Cory, in our last call, I kind of view monetization, active monetization as part of the toolkit now, right? We've historically been a buy, you know, improve and hold company. I think what we're adding to there now is the monetization piece, which is not always a sale. It can be a spin-off as we did with Consensus. It can be an investment. There are different alternatives there, but to be open-minded about that. What I would say is that you could argue it's, you know, it's sort of a new feature.
It's part of how we'll be thinking from here on out.
The Connectivity sale was a big unlock for you. The question we get from investors is, what could come next? Is there another Connectivity-like business hidden in the portfolio that investors are missing? You know, what can you tell us in terms of what all is on the table as you continue the strategic review process and kind of what have your key learnings been thus far?
It makes me smile when you say hidden. It was right there as a segment. No, let me tell you a little bit about the Connectivity story because I think it's emblematic of a lot of what's inside of the portfolio and where I see the opportunity. Start with we acquired Ookla in 2014. That was the platform acquisition, we often enter into markets with a platform acquisition with a view towards organic and inorganic growth, right? What can we do with the platform? What can we do and stack on top of the platform? We acquired eight or nine other businesses after the Ookla business. We all in invested in acquisition capital roughly $370 million.
In the period of time in which we owned these businesses, we generated $685 million of adjusted EBITDA. Paid back the price of the acquisitions and then some, and then sold the business for $1.2 billion. It was not our best growing business last year, by the way. Our health business was. In fact, relatively flat in EBITDA. What I would say is, I don't think there's actually anything unique about that business in the context of our portfolio, which means I think all the businesses are fantastic businesses. Because I've had that like, "Oh, well, maybe that's the one," and I don't see it like that at all. I can't tell you what's next. What I will also say is that it doesn't necessarily need to be a segment-level deal.
If you look inside of each of our segments, you will see there's a portfolio of assets in there. Expressions of interest can and have been around very specific assets. I would say if you looked at it from an asset point of view, the portfolio has well north of 20 assets in it.
Okay. That's helpful. How do you think about balancing just the benefits of scale, especially on your advertising business, versus, you know, the benefits of simplifying and kind of unlocking value in the portfolio?
Well, that's a good question. What I would say is I think scale does matter within the verticals. Take our tech media business, the CNET Group. Having scale where CNET is the leader within tech media matters, or IGN and IGN Entertainment and being the leader in gaming media, and Everyday Health being the leader in health media. That does matter. Whether it matters that between verticals, we have scale, I'm not so sure it does for us. We don't really operate a corporate sales function, I just take a step back. Corporate is very small inside of Ziff Davis, always has been and out of design. The corporate center, we try to keep as small as I joke with Bret that, you know, there's about 100 or some odd people in corporate.
It might be 98 too many, excluding the two of us. We try to keep it really, really small because we want the resources within the portfolio businesses, and we want those businesses to be able to run their businesses. We're the central bank. We're making the capital allocate. They own their P&Ls. They don't own their balance sheets. They don't own their cash. What I would say is that because of that mindset, we actually have never operationalized a corporate sales function where we go to market as Ziff Davis. Ziff Davis is not something people buy. The ad market doesn't buy Ziff Davis. They're buying IGN Entertainment. We're very vertically and endemic driven. It makes sense, right? We're not doing kind of broad-based, you know, CPG marketing, for instance. That's not our formula.
Okay. I think I've pelted you enough on the strategic review question.
No, I can talk about it all day.
Let's go to AI. Kind of a two-parter, how are you guys using it internally, and how do you see it creating value at Ziff Davis?
I think there's two places. There's customer-facing, product innovation, there's, there is either cost savings or it's the combination of cost savings and acceleration of releases. On the consumer-facing side, continuous exploration and deployment of ways to make the existing products better. I've talked about a number of them. My favorite one is Lose It!, which is based here in Boston. Lose It! is a calorie-tracking application, very popular. For the longest time, the way you logged meals is you typed in what you ate, now you're basically taking photos, and we're using AI to essentially unpack what you've eaten. It just makes logging easier. The easier you make something like that, the, you know, the better retention we get and the better usage we get.
That's an example from a consumer-facing point of view. Where I'm most excited, though, is when we look at product and engineering inside of our company. It's not an insubstantial portion of our resources and our headcount and where we're focused. I think we're going to see radical improvements in at least the velocity of releases, things that, and we're seeing it now, things that were, you know, slated to be released in the fourth quarter of this year are getting released like now. The speed is incredible because we're essentially using coding agents to do nonstop coding and we're harnessing around it with humans. In the end, I think it's the one area where I absolutely believe this works, right? Everyone's looking for, you know, the separation of the, from hype to reality. This is real.
I think the coding piece of this is important given we're digital products, given that underlying all these digital products is code that's typed. As we evolve from human typists to robots typing and humans essentially governing, directing, I think it now becomes a function of our imagination of what can these products be and what can they do. A lot of what we're focused on right now at the company is really the art of the kind of what's your imagination tell you? What do you want each one of these products to do? I'm very excited about that piece of it. I think it's, you know, we're very margin focused and cash flow focused because of our acquisition based program.
Yes, I'd like to see it turn into free cashflow improvement, but I'd also like to see it turn into revenue acceleration that I think will get us also some multiple expansion in any scenario, whether it's inside the company as it is now, or as we have these discussions around asset monetization either way. Finding the balance between, you know, driving enterprise value while driving free cashflow.
Kind of, we talked about the disconnect in the portfolio value and the share price and that being a motivating factor for the review that you've been doing. My question is, you know, maybe broaden this out beyond Ziff Davis, right? The market is clearly, you know, pricing in a fairly bleak outlook for online publishing, you know, digital media, whatever you want to call it in general. What do you think investors are missing and kind of what's your outlook for the industry?
I'll start and then I'll wrangle Bret into here. Look, you know, it's interesting. We announced the sale of the Connectivity business for $1.2 billion. Stock responded, but only responded literally equal to the cash proceeds of the transaction, meaning that the remaining close to $400 million of EBITDA might have actually compressed.
I think it compressed a little, yeah.
Might have compressed in multiple, which is disappointing because that shouldn't be the conclusion that anyone draws. We're going to continue to focus on, you know, the opportunities that presents, and that includes buybacks, and we've been very consistent about that, but also asset monetization. Now, why is that happening? You know, look, I think that, you know, there can be a lot of reasons. There is very much this AI overhang that seems to attach itself to all of the portfolio. There's certainly search challenges when you think about CNET and RetailMeNot and BabyCenter. Those are the probably three at the top of the list where, yes, the change in the Google search engine result page and the potential loss of queries within Google to other platforms has resulted in less traffic. That's a factual statement.
Now, we feel we have answers to that, and we can talk about that, but we feel we have answers to that with respect to those businesses. As I said, there's over, you know, over 20 different businesses. Many of them, this has no, you know, connection to. I think we're in this, you take the worst fear attached to where it's, you know, maybe presents itself most, and you attach it to the entire portfolio, and that's kind of where we get.
Cory, it's always difficult to sit in a seat like this and speak for the market as a whole, or at least our sector of the market. Obviously, we're first principles thinkers, and the stock price reflects the last trade. That's just a reality. A lot of factors go into that. When we think about the business sort of very broadly, we think about, you know, the cash flow we produce, the growth that we can generate, and the risk associated with the portfolio, and that results in a multiple. As an active purchaser of our stock, I think we've spoken that we think that valuation is below the company's intrinsic value. Tying our conversation together, we've taken proactive steps to realize certain of that value with at least one transaction. We've talked about the continued pursuit of potential other transactions.
What we have been able to do, at least in the last couple of years, particularly where this pressure has manifest, is be pretty resilient. I think what has, you know, resulted in low single-digit top-line pressure from an organic perspective has been sort of buttressed by maintaining margins, by producing significant amounts of cash flow, by deploying a modest amount of our investable capital into M&A to continue to diversify our businesses. Not 100% of our revenue, it falls into the traditional online advertising bucket. In fact, in Q1 alone, not quite, but nearly 40% of our revenue is non-advertising. Within our advertising revenue, we have certain businesses that are advertising revenue that are not traditional web advertising, like our TDS Gift Cards business.
There's a lot of diversity and a lot of resiliency in our portfolio that is in these parts of the businesses under our four reportable segments. It's incumbent upon us to continue to navigate this space, to continue to produce cash, allocate that cash as smartly as we can. At least in the last handful of years, we've taken the view that purchasing our stock is the right allocation.
Maybe to tie it all together on the capital allocation side, I do want to come to the kind of trends in the core business. You've talked a little bit about how the capital allocation's changing. Maybe just level set for everyone, what is the capital allocation strategy today on a go-forward basis? I think it's an, you know, particularly important question. You're getting close to $1 billion from the Connectivity sale any day now. You know, what do you plan, you know, what do you plan to do with that?
Yeah. Like, when you use the term on a go-forward basis, it makes the question even harder than it sounds because it presumes a set of facts and factors in the future which will be exactly like the ones we have today. I don't wanna go down the spiral of the macro in that, you know, the uncertainty that we have in the Middle East and, you know, even domestically with pressure on oil, inflation, whatnot. We've been largely resilient to those factors, which has been great about our business, and I wouldn't speak to those factors as the pressures that we've experienced recently. The world can change. Because of that, what do we do? We think about capital allocation as dynamic. We think about four pillars. There's essentially four things that we can do with our investable resources.
We can continue to strengthen our balance sheet, whether it be repay debt or accumulate cash. A strong balance sheet, of which we believe ours is the bedrock foundation of any capital allocation strategy. After that, there's only three more things that we can do. We can continue to invest in our businesses, whether it be increase OpEx, increase CapEx. That's an ongoing decision. We think about it every day. We're in constant dialogue with our businesses about what their needs are. Yes, there's pressure from the center at times to see what we can, you know, trim back our investments, particularly with the tools that are emerging from AI, which may impact, as Vivek spoke about, our ability to more rapidly deliver product through software development at a more, you know, efficient investment ratio.
Our businesses get our capital essentially first, because if we believe there's opportunity for them to strengthen their businesses through spending operationally or investing through capital, and there's strong evidence that on a risk-reward basis that can produce return, they get that money. Which leaves us to either investing externally, which the company has a rich history of doing, and Vivek spoke about that, but we've pared that back the last couple of years, only investing under $70 million in M&A in 2025. This year, we've announced one small deal. We will continue to be active in this marketplace to the extent that we believe that we create value for our shareholders through external investment. Then you get to essentially broadly defined return of capital and to our shareholders.
We've done that through our share buyback program. Again, we view that as an investment decision. We're buying a fractional interest in an entity that looks exactly like Ziff Davis because it is Ziff Davis. As we move forward, we'll balance those four pillars. You know, we have, you know, we'll consider our various rights and obligations, you know, the flexibilities that we have and what the, you know, at that moment in time, what we believe the proper allocation of capital is. Again, I'd love to put a stake in the ground and tell you this is exactly what we do, but in six months, but I need to know what the stock price is gonna be in six months.
Right.
I don't know what that is.
Okay. I should have mentioned at the beginning, if anyone has a question in the room, raise your hand, and I think you can submit it online as well. I'll keep going for now, though. Okay. Moving to the current state of the business. Vivek, you went through the 20 assets, but bucketed into four segments. I won't ask you to give us the trends across all 20 assets, but maybe some high-level puts and takes that are impacting growth and what you're seeing across the portfolio.
You know, the nature of your question, I think, underlies something that's important too, right? I think that, on the one hand, you know, you may say, "Wow, it's complex." On the other hand, I'd say we're a diversified portfolio, and as ostensibly an asset management business, that's a good thing, right? I think that, you know, that's something to just underscore. I would say, you know, I've heard people say, "Oh, well, you're like a publicly traded private equity firm." I think historically, I said, "Well, you know, we're holding forever, and so that way we distinguish ourselves." As we get into active monetization, maybe that parallel or that comparison becomes more appropriate.
In that way, I would say again, if you look at the core of what we do, which is how we source deals, how we evaluate transactions, how we strike those transactions, what we do to unlock value, I'd put our track record up against really anybody, and Ookla is just one example. I mean, that, those are extraordinary return profiles. I think it's just, you know, it's important to, to raise that piece, and I think in some ways, I think it's incumbent upon us to provide more insight into that. I think the Ookla transaction provided a great deal of insight, and we provided a lot of information around that transaction.
To your question around what's going on then within the portfolio of the assets that we own today, you know, I would say on the tech and shopping side, that's been our most challenged area. That's where the changes in Google and the Google algorithm have affected us the most. What I will say is that I think that alternative sources of engagement, social, video, app, browser extension with respect to RetailMeNot, there are a whole host of ways in which we are partner traffic, ways in which we're able to start to mitigate that. Some of that comes at a different margin profile, so there's a little bit of a, you know, a margin shift that goes on there.
For the most part, look, I think that we're navigating it is real pressure, and I don't see that pressure abating. I also am not in the category of Google goes to zero. I don't believe that. I understand that's the talk. In the end, and we've also quantified for the market what Google is really worth inside of our larger company. I would say, gaming and entertainment, very strong, always been a good steady eddy player. The Humble part of that, which is more the commerce part, is really doing well and has nothing to do with, you know, search and advertising and things like that. Really unique proposition where we bring a lot of value to consumers through bundles of games.
We bring value to the games publishers as we align with charities and allow them to pursue, you know, their purpose-driven agenda. It's just a great business, and I think a lot of good things going on there. Health and wellness has been consistently a great performer for us. We had a little challenge in the direct-to-provider side, where we're doing marketing against healthcare professionals versus patients. We see things improving there, but we had a couple of hiccups there. On the search side, I would say BabyCenter is at it, but again, has had seen some challenges there, but I view that as a very different business in the way we're sort of evolving that business. And then cyber and MarTech is doing well.
That used to be, you know, the area we were really focused on turning around. They've done a very good job in lots of parts of that business. You know, I think software right now is under some pressure, but I look at these as great subscription businesses. Bret make the point, I think the balance between advertising and subscription has always been important for us inside of the portfolio. I've been in the advertising business a long time, I've seen how it can fluctuate. Having the, I think the stability of the subscription businesses are good. I think the other thing is when we think about performance, I encourage investors to, you know, look at the segment-level performance closely and historically. There's a lot there, right?
You know, I think averages can be deceiving sometimes, right? If you sit there and you say, "Okay, I get it. Maybe these assets sit at this value in the sum of the parts, but these should be at a reasonable value." I think if investors had done that, they would have easily seen what the hidden asset of Connectivity really was worth.
Bret, maybe just kinda tie that to the financials. You've talked of an expectation, to be clear, you're not giving formal guidance at the moment, but I think you've kind of alluded to an expectation for revenue growth to, you know, improve in the back half of the year and margins too as well. Kinda what's giving you the confidence in that and why are trends expected to improve through the year?
Yeah. It's I'm not sure I'd use the word trends as much as I'd use the word just varying elements. I think when you're running a business that has the diversity of revenue streams that ours has, there are many, many puts and takes that go into that equation. When we look at the comparison of Q1 2026 over Q1 2025, we expected some top-line pressure, we expected some margin pressure. We actually delivered slightly better than our expectations, but there was that pressure. We look at Q2, and it's similar.
As we get into the back half of the year and we look at what Q3 2026 might look like. Again, this is all on our recently reported continuing operations basis, where we're expressing for the period of time that we continue to own Connectivity outside of our continuing operations reporting. When we look at those four reportable segments plus corporate and the other elements of it rolled up together, we think Q3 offers us an opportunity to start to improve performance relative to Q3 2025. It goes to the heart of Vivek's business-by-business description, where each of those businesses serving their individual marketplaces has different risks and opportunities, has different year-over-year comparisons, has different insight into what might be in front of them.
Part of it is based on what we expect to see as a business, at least in our advertising business, largely depends on direct advertising and our relationships with agencies, with brands, and not riding the ups and downs largely of the programmatic marketplace. We get some visibility into the expected spending of our largest clients. That visibility often manifests exactly as we anticipate. It sometimes manifests differently, acceleration into a quarter, deceleration past a quarter, a buy that you didn't expect to see, a buy that gets either postponed or canceled. When we look at the back half of the year, we expect overall to be better.
Layer on top of that the trends that we see in our subscription businesses, and some of the unique aspects of the year-over-year comparisons, which benefit the second half of the year to a degree where they put pressure on us in the first half of the year.
Any questions in the audience? All right, I'll keep rolling. Okay. Vivek, you alluded to some of the off-platform, I don't think you used those words, but off-platform initiatives you're doing in the business. Could you elaborate on kind of what exactly what some of your initiatives are and how that's kind of offsetting some of that search headroom?
Yeah. When we mean off-platform, we're essentially talking about engagement with our content that is outside of our website or our app. That will be Instagram, Facebook, TikTok, you know, YouTube, Snapchat, all of those platforms. We're seeing far more engagement on those platforms today than we do see on our own. Distributed content, and monetizing that content by integrating advertising into those platforms. That has been very successful for us. As I said, that comes with a tax, right? There's a platform tax in some form or fashion, recognize that. It's still growth, and it's sources of growth, and we continue to see opportunities to grow.
There's also partners, this is one we haven't talked a lot about, but it is a great example is within our health business, we've built what is essentially a hospital media network. You've heard of retail ad networks, this is a hospital ad network. We have exclusive relationships with the Mayo Clinic and Cleveland Clinic, the one and two providers of information on the web from healthcare, from hospitals, from institutions, and we're their monetization partners. We run the advertising programs there. That's a growing and expanding opportunity for us, you know, as in the same way that retail were looking for high margin, incremental dollars for their P&Ls and for their income statements, you can imagine the same is in healthcare, right? A lot of hospitals are actually under a fair amount of P&L pressure right now.
We see that as an opportunity. Finding partners where we can bring our monetization infrastructure to bear is also really, really important. That combination of things. There are things like email. You know, you'd be surprised, like we own a business called the Skimm. It's entirely an email business, and it does really, really, really well for us. MedPage Today is largely an email business. It's a doctor news service, but a lot of it comes through an email that you get every day. You click through, yes, it comes to the website, but your real first engagement is with email. We're very bullish on that. There are a variety of ways in which we're looking at how do we leverage trust, brand, content outside of the you know, searched, indexed web. That's what's changing, right?
The navigation that started maybe at search isn't starting there. I say to people all the time, "Look at your own screen time. Look at the percentage of time you're spending in various applications." The browser application is one, but then the messaging application and various social applications, and you start to see that your own behavior's evolved. That evolution we've got to evolve with. I will say that's the key with all of this, is that I think great brands can evolve. People forget, PC Magazine was a printed magazine in 1981. It probably makes more today than it did at any point in its history. That's like, you know, that's what great brands can do.
Okay. Last question. Maybe I'll let both of you answer it if you want. Just bigger picture question as you look to the year ahead. We're sitting here hopefully this time next year. Kind of what are the one or two things you're most excited about that you think no one's really talking about today but could be transformative to the business?
I'll start. Look, I think that in one to two years, I think people will start to appreciate what's inside of the portfolio because either that's happened, or we continue to do things that make people realize that they've underestimated the value. The second thing is what shouldn't be lost here is it's not only about selling, it's about the skill that this company really does have and has shown over the last 15 + years, is its ability to identify, acquire, and improve businesses is real. That is a real skill set that sits inside of this company. I hope people recognize that.
Yeah, I think we've spoke about a lot of it today, Cory. The one thing I might just add that maybe we didn't touch upon is I think having these four diversified businesses creates an opportunity within our company to really knowledge share, that to see how things are working or not working within one business, may be applicable to what's happening in our other businesses. We've seen it in the last 12 months with the development of our AI-driven customer information platforms.
We see it along the lines of what Vivek's speaking of, is that a business like IGN that has largely migrated its business off the traditional display advertising on the web into the partnership platforms and working on social is an avenue available for other businesses, that there are opportunities with advertisers within business one, should be opportunities with advertisers in business two, and, you know, there's a lot in front of us.
Great. We'll leave it there. Thank you.
Thanks, Cory. Appreciate it.