Q2 2026 Ziff Davis Earnings Conference Call

Yeah, thank you.

Yeah, no, thanks, Rob, and all good questions. Let me start with your first, which was HCP advertising, which mainly shows up within our MedPage business. So, look, the good news is that MedPage grew sequentially over the first quarter, and as I said, we expect that sequential improvement to continue through the balance of 2026. The structural challenge is also real, right? We have some large pharma clients who have reduced their overall spend levels with us and have shifted towards some lower cost platforms. Many of those are actually AI-based platforms. And so as we have more entrants in the marketplace, adding inventory to what has historically been a fairly tight HCP ad market, that's put pressure on us. And so what we're doing is looking to expand our distribution. You know, we mentioned the EHR opportunity, and so that's probably where we're mostly focused. I think in the end, we produce content that is valuable and can feed a lot of these engines, but I don't think we have the ambition necessarily to be an AI medical chat bot. The other thing I'll just say is one of the advantages I think we have within our health business is that we're both on the HCP side as well as on the consumer side, the patient side. And the consumer side, the DTC advertising is performing quite well. We're seeing it both in the advertising business as well as the subscription business, which is Lose It, where the rapid growth of GLP-1s is only helping those businesses. I also mentioned on this call, and I think calls in the past, just about the hospital media network that we have assembled. We continue to expand that. We think that is a strategic asset. I think with respect to your second question around the game environment and the slate, yes, my own experience is that gaming is very much a hits-driven business. A lot of the gaming slate gets anchored around major releases. GTA 6 has been delayed a few times. It is slated to launch in November of this year. We think that unlocks a fair amount of activity. We're excited for it. So blockbuster games like that, major AAA franchises can be helpful. So we do think that will help sort of get us some recovery on the IGN side. And as you know, in the gaming business, we also have our humble business, humble bundle business, and that's done very, very well. And so there we have some new leadership. They've done a great job in enhancing the content that we package and sell through bundles and through our subscription product called Choice. And it's there, frankly, where they were really the first of our businesses where we took fully an agentic coding approach to essentially a platform redevelopment process that as it reaches its conclusion shortly, puts us in a position of just rolling out features at a much faster pace. and so we're excited about the revenue potential that comes out of unlocking much faster feature rollout on a platform like humble and then across the rest of the company thank you very much rob did i answer all your questions or did i miss one no you got everything thank you thank you

thank you your next question is coming from rishi jaluria from rbc rishi your line is live please go ahead oh wonderful thanks so much for taking my questions uh great to see the connectivity uh divestment and now some greater optionality maybe two questions from me um first i wanted to you know with vivek i recognize capital options are still very much everything is on the table i i maybe want to understand uh you know what number one what is the the kind of potential pipeline out there look and maybe more broadly speaking strategically should we be thinking about you know additional acquisitions again assuming it's going to come at a reasonable price and you're going to be disciplined on valuation it should be assumed that you know or think of this as more of a try to diversify a way or you know diversify the the set so it's less susceptible a lot of those kind of traffic driven bear cases that we unfortunately consistently hear? Or is there an opportunity to maybe lean even further into it because all those cases are creating probably some major dislocations in assets that maybe were not attractive a year ago and maybe are starting to look a little bit more attractive now. And then I'm just turning to the cybersecurity and MarTech business. It seems like there's starting to be some green shoots there. I wanted to understand, you know, within MarTech, you know, do you see kind of a longer-term data opportunity? I'm obviously trying to draw some of the parallels with UKRA and the value of data in that asset. And I'm not talking about selling the MarTech business, but at least in terms of finding new ways of monetizing the data asset that you have within the MarTech group. I would love to hear kind of your thoughts on all of you, Bob. Thanks so much.

No, thank you, Rishi. Great questions. And let me just start, I think, on your question around sort of our thinking around acquisitions and just M&A dynamics. And you're right. We have a lot of cash on the balance sheet, $1.7 billion, strong cash flow generation from the portfolio of assets we continue to own. And so and, you know, the history of the company, we were built through acquisitions. We were a serial and programmatic acquirer, and that is our DNA. And that is very much part of our business model. So we're going to continue to look for attractive opportunities, you know, in the small to mid market, which is where, you know, we generally fit, think businesses between five and 50 million of EBITDA. We look for great brands. We think brands matter, particularly in an AI era and trusted brands in particular, and where we see an opportunity to create value. And we do believe that the market fear in digital businesses broadly, it's gone beyond even what you would think of as media or advertising based businesses, you know, presents us a unique opportunity to be an active buyer as long as the valuations are compelling. But at the same time, I think we recognize that, you know, all these acquisitions have to compete with our own stock. And we've obviously tilted our buying towards our stock over a number of quarters now. So look, I think it's all on the table. We're not dogmatic. I think we're practical. We are, you know, pragmatic. We look at this, you know, really on a case by case basis, and we're going to continue to do that. The thing that I would just counsel is patience. I think we have to be really thoughtful about this, and I think we're showing ourselves to be. The company has always been about patience and discipline, and I don't see why we would abandon that mindset at this point. On your question, but Brett, there may be anything you wanted to add before I go on to the cyber and martech.

Yeah, not so much as added, maybe emphasized that the focus is on shareholder value creation at per share price. The decisions we make will be driven by facts and circumstances. You can look at our business back five plus years and see along part of your question was about diversifying our revenue. diversifying deeply into subscription and licensing revenue to the point where it was almost 50% of our total revenue, but then presented with the opportunity to monetize connectivity, which was purely a subscription and licensing business at the value that we were able to monetize it and capture what we believe to be the gap between the trading price and the implied value of all our assets, but, you know, see through to connectivity versus the value we were able to capture on a cash basis through that transaction overcame sort of that strategy, if you will, of diversifying more into subscription licensing revenue. So I think emphasizing everything Vivek said, but noting that the numbers, the perception of risk-weighted returns and the facts and circumstances as they develop will influence our decision-making.

You know, I think on cyber and hard tech, I will highlight, because there are a lot of brands and businesses in there, I'll highlight IPVanish as being a business that, you know, a few years ago was a business that we talked about seeing potential for growth on better customer acquisition, better retention, and in a B2B2C platform where we provide white-label solutions for other companies looking to provide VPN services. And we've done those three things, and the business has pointed and returned to growth and is now one of our better businesses. And so I think that there's an example of something where we were able to find this asset and get it to a good growth position. I think also I'd highlight SMTP. I mentioned it in the prepared remarks. It's a really good infrastructural play within the email ecosystem that is really growing nicely, and we see some nice potential. You know, on the data question, I'll be careful. I certainly don't see it on the cybersecurity side. Obviously, as a VPN provider, there is no data collection, and there is no log, and so that's important to us. I think on the MarTech side, yeah, I think we've got some interesting data assets in the email space, in the SEO space, and so looking for ways to unlock that. I also believe, by the way, we have interesting data within our media businesses as well. And so, look, that's very much part of the – we talk about multiple rent extraction out of our assets. That's certainly a rent, which is, you know, leveraging data, data for licensing, data to improve product, et cetera. So much.

Thank you. Thank you. Your next question is coming from Ron Josie from Citi. Ron, your line is live. Please go ahead.

Thanks for taking the question. And Vivek, I wanted to ask a little bit more about your comments as related to tech and shopping regarding headwinds and traditional search traffic and just seeing if there are alternatives sort of become more clear as you look at lower as the industry sort of understands what's going on from a traffic perspective to talk to us about the plans overall as we look to continue to shore up or grow tech and shopping. And then, you know, I also wanted to hear a little bit more just about the progress you're making in growing off platform channels. You know, we talked about alternatives, social as an example to manage perhaps the offset and search, but any insights there would be very helpful. Thank you.

Yeah, no, thanks, Ron. Great question. So, you know, look, we continue to see declines in search referral traffic. We're certainly not alone. I think this is an industry-wide experience. we're seeing an increase in the rate of AIOs within the Google search experience on the queries that are relevant to our properties. I think the last time I provided a statistic, I think it was around 36% of our queries presented AIOs. That's at 50%. And that's kind of in line with, I think, overall prevalence of AIOs within search. So this is clearly going in that direction. But as you point out, we continue to make progress in other sources of traffic and engagement, social platforms, so the usual suspects within our native apps, within email. We are quite good as an email publisher getting into the inbox. You know, when we acquired the skim, for instance, it was very much recognizing that inbox placement and having permission to be an inbox may be one of the last places where you really can't get this intermediated video, both on domain, distributed, OTT, YouTube. So all of those are growing. And then why the ad revenue decline is not equal to the web traffic decline. It is it is those offsets. I'll also point out we have a lot of non-traffic businesses inside of the company, and I think that points a little bit to the earlier question and observation that we've always been thoughtful about having a nice balance between businesses that extract rents from traffic versus those that are more about extracting transaction or subscription or licensing revenues. I also mentioned, you know, we've had success in citations and answer share when it comes to Google AIOs. And, you know, it's worth pointing out that, you know, Google is by far the largest AI answer platform because of the AIO experience. And so that's not going unnoticed. I mentioned SEMrush. I should have mentioned IGN was also on their list of top-sided sources. And so that sparked a lot of interest from marketers in aligning with our brands who have trust in a time where I think everyone's trying to sort of, you know, distance themselves from AI slop. So I think there's a lot going on. It is a period of transition. It's one that, you know, isn't new. It's been going on for quite some time. And I think we've managed well. And I do think in the end, these brands, because they're leadership brands in high-value vertical categories, do really stand a great chance of being successful in whatever comes next. Because there'll be something that I haven't even mentioned here that gets developed in the ecosystem.

And I think we'll have a very good opportunity to present our brands onto whatever platforms those represent. in fact that that's super interesting and just talk just a little bit more in this new world of of aios and and also ailms or just lms how important it is to build up the brand and what the team is doing to to sort of continue to grow the brand so that you know as ig and you talked talked about being a top-sided source you know more advertisers are going to ig and directly given the traffic that's coming from aios thank you yeah no that's you just nailed it right i think that what's happening now is in marketer assessment of media partners, citation and

answer share has become part of that conversation. And we do very, very well with that within Google, which is really the dominant platform, right? It's well over 70% of the market. And you also have Gemini, which is coming on. And so, look, I think that in the end, translating that into value for us is the key, but it certainly caught the attention of others. And these are third parties who are, you know, there are a bunch of companies, including SEMrush, including our own Moz, that report on AI visibility and sort of GEO. And so GEO has become kind of the new SEO. So I think we feel good about that. It's early days. How do you translate, you know, our strong position into strong media partnerships? But that's absolutely happening right now.

Thank you. Appreciate it.

Of course.

Thank you. Your next question is coming from Sean Patil from Susquehanna. Sean, your line is live. Please go ahead.

Great. Thanks. This is Daniel on for Sean, thanks so much for taking our question. I was just curious if you have any thoughts about Bending Spoons. They're also an acquirer of digital assets and they've generally had a positive reception in the market since their IPO. So what's your view there? And then also curious on just AI content licensing and just how should we think about that and what type of assets in the portfolio you would view as the most attractive to potentially monetize from that perspective? Thank you.

Yeah, you know, so bending spoons, it's a useful data point. You know, we know them. We got to know them some years ago. They do a great job. They really do. You're right. They have a very similar model to ours, acquiring, improving, and operating, you know, durable digital brands. And so there are similarities. I think there are differences maybe in terms of size of what we're looking at. So I don't think we necessarily run into each other in the M&A market. And you're right. Look, the market has assigned them a double-digit multiple, and it just reinforces kind of our own view that trusted brands like CNET and PCMAG and IGN and Everyday Health and Baby Center and all the properties that we operate and own, carry much more value than our current multiple reflects and so for for us the answer to that is to be an aggressive buyer of our own stock you know not necessarily just wait for the market to re-rate us and so that's kind of how we look at it but it's nice you know historically a lot of times people you know have asked you know well who can we compare you to and and what are comps in the marketplace and so you know we're pleased to see them uh do well and and you know we can we can, you know, do what we do and hope the market starts to recognize that as well on our side. In terms of AI licensing, I sort of reiterate what I said last quarter, which is we're just not inclined to sign a RAG-focused agreement that compromises our right to fair compensation for foundational training. This is the important position that we have taken And so we want to establish the right financial precedent more than anything else than booking client of a quick dollar. So the litigation that we have with OpenAI is proceeding. And we continue to believe that as greater clarity on sort of the underlying legal questions come to bear, that it'll lead to a rational licensing market for us and frankly for everyone. So I'd rather be patient than early and, you know, lock in a little bit of cash. And so that's kind of where we are there.

Thank you. This does conclude today's question and answer session. I would now like to pass the floor back to Brett Richter for closing remarks.

Thank you, Tom. And thank you, everyone, for joining us this morning. We continue to appreciate your investment of your time, energy, and resources. into our company. We look forward to our next update with you in the third quarter and for connecting in the interim period.

Thank you. This does conclude today's conference call. You may disconnect at this time and have a wonderful day. Thank you once again for your for participation.