Ziff Davis, Inc. ((ZD)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Ziff Davis struck a cautiously upbeat tone on its latest earnings call, pairing modest full‑year growth and hefty cash generation with frank acknowledgment of sharp pressure in its Tech & Shopping unit and murky visibility around AI licensing and 2026 guidance. Management leaned on a strong balance sheet, resilient margins and active buybacks to frame the story as one of profitable stability amid disruption.
Full-Year Revenue Growth and Stable Profitability
Ziff Davis reported 2025 revenue of $1,451.3 million, up 3.5%, alongside adjusted EBITDA of $495.1 million. The full‑year adjusted EBITDA margin held at a solid 34.1%, underscoring management’s focus on profitable growth despite pockets of weakness.
Free Cash Flow Engine Powers the Story
Free cash flow reached $287.9 million in 2025, described as nearly $290 million and equal to 58.1% of adjusted EBITDA. In Q4 alone, free cash flow rose to $157.8 million from $131.1 million a year earlier, providing significant flexibility for investment and capital returns.
Balance Sheet Strength and Low Leverage
The company ended the year with $607 million in cash and cash equivalents plus $93 million in long‑term investments. With gross leverage at 1.8x trailing EBITDA and net leverage at just 0.5x (0.3x including investments), Ziff Davis has ample room to weather volatility and pursue deals.
Aggressive Share Repurchases Signal Confidence
Ziff Davis returned roughly 60% of its free cash flow to shareholders in 2025, deploying $174 million to buy back about 4.8 million shares. That reduced shares outstanding by more than 10% in 2025 and over 18% since the end of 2022, and the board raised its authorization to 10.7 million shares.
Health & Wellness Delivers Record Results
The Health & Wellness segment posted record revenue and adjusted EBITDA for the year, with Q4 revenue up 8.6% year over year. Management highlighted strong pharma ad spend, growth in consumer subscriptions such as Lose It!, and rising adoption of Halo, its AI‑powered data activation tool.
Connectivity Rides Demand for Network Performance
Connectivity turned in a record fourth quarter, with revenue up 11% versus last year and momentum expected to continue. New offerings like the Speedtest Pulse handheld diagnostic device and Speedtest Certified verification program are designed to support ongoing double‑digit growth into 2026.
Direct-to-Consumer and Digital Engagement Momentum
CNET Group’s video and social views nearly doubled in Q4 and rose more than 80% for the year to 1 billion, while IGN’s Facebook and X views also grew. IGN Store sales tripled, and Humble Bundle logged its best revenue quarter in five years, lifting direct‑to‑consumer revenue to almost $90 million in 2025.
Gaming & Entertainment and Cybersecurity Hold Up
Gaming & Entertainment revenue grew 1.5% in Q4, mirroring full‑year growth and showing resilience in a choppy environment. Cybersecurity and Martech revenue increased 2.7% in Q4, supported by consumer VPN, cloud backup strength and enhancements such as upgraded threat protection and VIPRE email security.
M&A Remains Disciplined and Opportunistic
Ziff Davis closed seven acquisitions in 2025, investing $68.7 million net of cash acquired, and stressed it will remain an active buyer. Management framed current market valuations, combined with strong cash generation, as fertile ground for disciplined deal‑making in 2026.
Tech & Shopping Hit Hard by Traffic Declines
The Tech & Shopping segment was the clear weak spot, with Q4 revenue down 18% and driving much of the quarter’s softness. Management pointed to a sharp drop in web search traffic that significantly reduced affiliate commerce commissions, pressuring both revenue and visibility.
Affiliate Commerce Revenue Drop Weighs on Results
Affiliate commerce commissions from organic traffic were roughly $90 million in 2025, down about $25 million year over year, with roughly half of that decline in Q4. This concentrated hit in Tech & Shopping underscored how sensitive the model is to search‑driven traffic shifts.
Near-Term Profitability Pressure Emerges
Q4 consolidated revenue slipped 1.5% to $406.7 million, while adjusted EBITDA fell 5% to $163.2 million, though margin remained high at 40.1%. Management cautioned that Q1 2026 revenue should be flat to slightly negative, with adjusted EBITDA margins about three percentage points lower than last year.
Exiting Games Publishing to Reduce Volatility
Game Publishing produced negative net revenue of $2.5 million in Q4 and was a roughly $14 million year‑over‑year drag in 2025. Ziff Davis sold the business in Q4 to eliminate a noncore and volatile contributor, forgoing recognition of potential contingent payments in favor of simplifying the portfolio.
Strategic Review Drives Guidance Deferral
The company has hired external advisers to explore strategic options, a process that led management to defer formal 2026 guidance. While this review creates near‑term uncertainty for investors, it also signals an openness to structural moves that could unlock value.
Cautious Approach to AI Licensing
Management described a cautious stance on AI content licensing amid evolving frameworks and ongoing litigation. They emphasized they will not enter retrieval‑based agreements that trade away training rights for short‑term compensation, contributing to timing and revenue uncertainty but aiming to protect long‑term economics.
Forward-Looking Outlook and Margin Framework
For 2026, Ziff Davis expects Tech & Shopping revenue to decline mid‑single digits, with a double‑digit drop in the first half and improvement in the second. Other major segments are projected to grow low‑ to mid‑single digits, Connectivity is expected to remain in double‑digit growth, Q1 revenue should be flat to slightly down, and full‑year EBITDA margins are targeted around 34%.
Ziff Davis’ latest earnings call painted a picture of a cash‑rich, margin‑focused operator navigating sharp turbulence in Tech & Shopping and a shifting AI landscape. For investors, the key questions ahead will be how quickly affiliate commerce stabilizes, what the strategic review yields, and whether durable growth can re‑emerge from the company’s stronger segments.