Ziff Davies Aktie

All right. Good morning. Thanks, everyone, for joining. Excited to have Ziff Davis for our first fireside at the TMC Conference. Vivek and Bret, thank you for joining us.

That's great to be here. Thank you.

All right. So just to level set for everyone in the room and on the phone. 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?

Yes, sure. So Ziff Davis is actually celebrating its 100th anniversary next year. So 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 2-year hold period, we really transformed the business, did a couple of tuck-in acquisitions and sold the business for almost 4x our invested capital 2 years later to J2 Global. And so J2 Global, which, as you know, is the predecessor to this company, essentially financed us really 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. And so 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.

Over the last few years, the market has been tough for the business and the multiple attached to our ratings has compressed significantly. So a lot of our capital allocation over the past few years has been in share buybacks. We bought in about 25% of the company in that period of time.

And then 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. So on a go-forward basis, the 4 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.

So 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.

Then we have our Health and Wellness segment goes to market as the Everyday Health Group inside of that, Everyday Health, and we have MedPage and we have Lose It! and we have theSkimm and a series of properties that are around the digitization of health care, the digitization of pharma commercialization, sort of the consumerization of health care. And so that's the Everyday Health Group.

And then 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.

And then finally, our Cybersecurity and Martech segment, where we have a few thesis 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.

And then 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. And so how do we help them with earned media, e-mail, 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 will 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. The per share price of the company has been under an immense amount of pressure. The public markets haven't been valuing the portfolio in the way we would like to see. And so we have identified opportunities to engage in dialogue around unlocking some of that value. So that's what brought it on.

What actually precipitated it was when we moved to 5 segments from our segment reporting, we used to have 2, we moved to 5. 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. And what happened instead was we just got a lot of inbound calls. And so we organized around that.

We've been very transparent about being open-minded. And so what I would say is process may be the wrong word because as I said, 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, improve and hold company. And 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. And so what I would say is that you could argue, it's sort of a new feature. It's part of how we'll be thinking from here on out.

So 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? 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. But no, so 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.

So start with we acquired Ookla in 2014. That was the platform acquisition. And we also enter into markets with a platform acquisition with a view towards organic and inorganic growth, right? So what can we do with the platform? What can we do and stack on top of the platform. We acquired 9 other or 8 or 9 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. So 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 it was, in fact, relatively flat in EBITDA.

So 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. And because I've had that like, "Oh, well, maybe that's just -- that's the one," and I don't see it like that at all.

And so I can't tell you what's next. And what I will also say is that it doesn't necessarily need to be a segment level deal. So if you look inside of each of our segments, you will see there's a portfolio of assets in there. And so expressions of interest can and have been around very specific assets. And so 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. And how do you think about balancing just the benefits of scale, especially on your advertising business versus the benefits of simplifying and kind of unlocking value in the portfolio?

That's a good question. So what I would say is I think scale does matter within the verticals. So 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. And so I just take a step back. Corporate is very small inside of Ziff Davis, always has been and out of design. So the corporate center, we try to keep as small as I joke with Bret that -- there's about 100 or some-odd people in corporate. It might be 98 too many, excluding the 2 of us, but we try to keep it really, really small because we want the resources within the portfolio of 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. And so 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. And we're very vertically and endemic driven. It makes sense, right? We're not doing kind of broad-based CPG marketing, for instance. That's not our formula.

Okay. I think I've helped you enough on the strategic review question. So...

No, I can talk about it all day.

Let's go to AI. Kind of a 2-parter. How are you guys using it internally? And how do you see it creating value at Ziff Davis?

So I think there's 2 places. There's customer-facing product innovation and then there is either cost savings or it's a combination of cost savings and acceleration of releases. So 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. And Lose It! is a calorie tracking application, very popular. And for the longest time, the way you log meals is you typed in what you ape and now you're basically taking photos and we're using AI to essentially unpack what you've eaten. It just makes logging easier. And the easier you make something like that, the better retention we get, the better usage we get. So there -- 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 slated to be released in the fourth quarter of this year are getting released like now. And so the speed is incredible because we're essentially using coding agents to do nonstop coding, and we're harnessing around it with humans.

But in the end, I think it's the one area where I absolutely believe this works, right? Everyone is looking for the separation of the -- from hype to reality. This is real. So 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 types 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. And so 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? So I'm very excited about that piece of it. And I think it's -- we're very margin-focused and cash flow because of our acquisition-based program.

So yes, I'd like to see it turn into free cash flow 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. So finding the balance between driving enterprise value while driving free cash flow.

So 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 maybe broaden this out beyond the data, right? The market is clearly pricing in a fairly bleak outlook for online publishing, digital media, whatever you want to call it, in general. What do you think investors are missing? Kind of what's your outlook for the industry?

I'll start and then I'll wrangle Bret into here. But look, it's interesting. So 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.

Compressed a little bit.

Might have compressed the multiple, which is disappointing because it's -- that shouldn't be the conclusion that anyone draws. And so we're going to continue to focus on 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? Look, I think that 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 3 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. But as I said, there's over 20 different businesses. Many of them, this has no connection to. So I think we're in this -- you take the worst -- you take the worst fear, attached to where it maybe presents itself most and you attach it to the entire portfolio, and that's kind of where we get. Bret.

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. So that's just a reality. A lot of factors go into that. But when we think about the business sort of very broadly, we think about the cash flow we produce, the growth that we can generate and the risk associated with the portfolio, and that results in a multiple.

And 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. But 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.

And I think what has 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 card 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 4 reportable segments. And it's incumbent upon us to continue to navigate this space to continue to produce cash, allocate that cash as smartly as we can. And at least in the last handful of years, we've taken the view that purchasing our stock is the right allocation.

So maybe to tie it all together on the capital allocation side, and I do want to come to the kind of trends in the core business. So you've talked a little bit about how the capital allocation is changing. Maybe just level set for everyone, what is the capital allocation strategy today on a go-forward basis. And I think it's a particularly important question. You're getting close to $1 billion from the connectivity sale any day now. So what do you plan to do with that?

Yes. 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 want to go down the spiral of the macro in that the uncertainty that we have in the Middle East and even domestically with pressure on oil, inflation and 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, but the world can change.

So because of that, what do we do? We think about capital allocation is dynamic. We think about 4 pillars. There's essentially 4 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, which we believe ours is, is the bedrock foundation of any capital allocation strategy.

And after that, there's only 3 more things that we can do. We can continue to invest in our businesses, whether it be increased OpEx, increase CapEx. That's an ongoing decision. We think about it every day. We're in constant dialogue our businesses about what their needs are.

Yes, there's pressure from the center at times to see what we can 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 efficient investment ratio. We -- but 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.

And this year, we've announced one small deal, yet 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. But then you get to essentially broadly defined return of capital to our shareholders. And we've done that through our share buyback program. But again, we almost -- 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, and as we move forward, we'll balance those 4 pillars. We have -- we'll consider our various rights and obligations, the flexibilities that we have and what the -- at that moment in time, what we believe the proper allocation of capital is.

And again, I'd love to put a stake in the ground and tell you this is exactly what we do, but -- for instance in 6 months, but I need to know what the stock price is going to be in 6 months, and 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. So moving to the current state of the business. So Vivek, you went through the 4 remaining seg -- well, 20 assets but bucketed into 4 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.

And the nature of your question, I think, underlies something that's important too, right? Like I think that on the one hand, you may say, wow, this is -- 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?

And so I think that, that's something to just underscore I would say I've heard people say, "Oh, you're like a publicly traded private equity firm. " And I think historically, I said, well, we're holding forever. And so that way, we distinguish ourselves. But as we get into active monetization, maybe that parallel or that comparison becomes more appropriate. And 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 those are extraordinary return profiles.

So I think it's important 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, 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 margin shift that goes on there.

But for the most part, look, I think that we're navigating it, but it is real pressure, and I don't see that pressure abating. But I also -- I'm not in the category of Google goes to 0. I don't believe that. I understand that's the talk. But in the end, and we've also quantified for the market what Google is really worth inside of a larger company.

I would say Gaming and Entertainment, very strong, always been a good, steady Eddie player. The humble part of that, which is more the commerce part, is really doing well and has nothing to do with 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 their purpose-driven agenda. So it's just a great business. 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 health care professionals versus patients. We see things improving there, but we had a couple of hiccups there.

And then 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. Like that used to be the area we were really focused on turning around. They've done a very good job in lots of parts of that business. And I think software right now is under some pressure, but I look at these as great subscription businesses. And 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, and so I've seen how it can fluctuate. And so having the -- I think the stability of the subscription businesses are good.

So look, I think the other thing is when we think about performance, I encourage investors to look at the segment level performance closely and historically, there's a lot there, right? And so I think averages can be deceiving sometimes, right? And 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. And I think if investors had done that, they would have easily seen what the hidden asset of connectivity really was worth.

And then, Bret, maybe just kind of tie that to the financials. So you've talked of an -- 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 improve in the back half of the year and margins too as well. Kind of what's giving you the confidence in that? And why are trends expected to improve through the year?

Yes. It's -- I'm not sure I used the word trends as much as I 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 to Q1 '26 over Q1 '25, 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. And as we get into the back half of the year and we look at what Q3 '26 might look like on -- and again, this is all on our recently reported continuing operations basis 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 4 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 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 writing 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.

But when we look at the back half of the year, we expect overall to be better, layering 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. So Vivek, you alluded to some of the off-platform -- I don't think you use 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 headwind?

Yes. So when we mean off-platform, we're essentially talking about engagement with our content that is outside of our website or our app. And so that will be Instagram, Facebook, TikTok, YouTube, Snapchat, all of those platforms, we're seeing far more engagement on those platforms today than we do see on our own. So 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. So recognize that. But it's still growth and it's sources of growth, and we continue to see opportunities to grow.

There's also partners. And 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. So we have exclusive relationships with the Mayo Clinic and Cleveland Clinic, the 1 and 2 providers of information on the web from health care, from hospitals, from institutions, and we are their monetization partners. So we run advertising programs there.

And that's a growing and expanding opportunity for us, as in the same way that retail we're looking for high-margin incremental dollars for their P&Ls and for their income statements, you can imagine the same as in health care, right? And a lot of hospitals are actually under a fair amount of P&L pressure right now. So we see that as an opportunity.

So finding partners where we can bring our monetization infrastructure to bear is also really important. So that combination of things. And then there are things like e-mail, you'd be surprised like we own a business called theSkimm. It's entirely an e-mail business, and it does really, really, really well for us.

MedPage Today is largely an e-mail business as a doctor news service, but a lot of it comes through an e-mail that you get every day. You click through, yes, it comes to the website, but your real first engagement is with e-mail. We're very bullish on that. So there are a variety of ways in which we're looking at how do we leverage trust, brand content outside of the searched indexed web. That's what's changing, right?

The navigation that started maybe a search isn't 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 has evolved. And so 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. So that's like -- 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 1 or 2 things you're most excited about that you think no one is really talking about today but could be transformative to the business?

I'll start and then. Look, I think that in 1 to 2 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.

And then 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-plus years is its ability to identify acquire and improve businesses is real. That is a real skill set that sits inside of this company, and I hope people recognize that.

Yes. I think we 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 4 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.

And we've seen it in the last 12 months with the development of AI-driven customer information platforms. We see it along the lines of what Vivek is 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 should be opportunities with advertisers in business 2. And there's a lot in front of us.

Great. We'll leave it there. Thank you.

Thanks, Cory. Appreciate it.

Good day, ladies and gentlemen, and welcome to the Ziff Davis First Quarter 2026 Earnings Conference Call. My name is Tom, and I will be the operator assisting you today. [Operator Instructions]

On this call will be Vivek Shah, CEO of Ziff Davis, and Bret Richter, Chief Financial Officer of Ziff Davis.

I will now turn the call over to Bret Richter, Chief Financial Officer of Ziff Davis. Thank you. You may begin.

Thank you. Good morning, everyone, and welcome to the Ziff Davis Investor Conference Call for the First Quarter of Fiscal Year 2026. As the operator mentioned, I am Bret Richter, Chief Financial Officer of Ziff Davis, and I am joined by our Chief Executive Officer, Vivek Shah.

A presentation is available for today's call. This presentation and our earnings release are available on our website, www.ziffdavis.com. You can also access the webcast from this site. When you launch the webcast, there is a button on the viewer on the right-hand side, which will allow you to expand the slides. After completing the presentation, we'll be conducting a Q&A. The operator will provide instructions regarding the procedures for asking questions. In addition, you can e-mail questions to [email protected].

Before we begin our prepared remarks, allow me to read the safe harbor language. As you know, this call and the webcast will include forward-looking statements. Such statements may involve risks and uncertainties that could cause actual results to differ materially from the anticipated results. Some of those risks and uncertainties include, but are not limited to, the risk factors that we have disclosed in our SEC filings, including our 10-K filings, recent 10-Q filings, various proxy statements and 8-K filings as well as additional risks and uncertainties that we have included as part of the slide show for the webcast.

We refer you to discussions in those documents regarding safe harbor language and forward-looking statements. In addition, following our business outlook slides are our supplemental materials, including reconciliation statements for non-GAAP measures to their nearest GAAP equivalent.

Now let me turn the call over to Vivek for his remarks.

Thank you, Bret, and good morning, everyone. Before I discuss our first quarter results, I want to share some high-level thoughts about the company and our vision. Ziff Davis' edge has always consisted of identifying, acquiring and improving businesses. From our first acquisition of PCMag in 2010, for a little more than $20 million, we have been a patient and disciplined buyer of digital media and Internet companies.

We've always been focused on business transformation, free cash flow generation and cash-on-cash returns. That model compounded value for a decade, and our shareholders were nicely rewarded. But in recent years, we believe the public market has increasingly denied Ziff Davis reasonable credit for the intrinsic value of the businesses that it owns. Our response, however, is not to abandon the acquisition program that has defined Ziff Davis, but to expand our capital allocation to embrace significant repurchases of our stock while also pursuing monetization opportunities for our businesses where we see an opportunity to unlock value through a transaction.

In simple terms, we see this as a pivot from our buy-and-hold past to a future in which active monetization represents a key tool in our pursuit of shareholder value creation. We're pleased with the market response to the announced sale of the Connectivity business, which we expect to close in the coming months. However, we believe that the current trading value of our stock implies that the market continues to assign a very low multiple to the adjusted EBITDA of the rest of our portfolio of businesses.

In other words, despite the market's positive reaction to the announcement of the sale of the Connectivity business, our current stock price implies that we're only getting credit to the expected cash proceeds of the connectivity sale while little additional value is being ascribed to the rest of our assets. As a result, we will continue to engage in the pursuit of transactions that offer the opportunity to highlight the value of the businesses in our portfolio.

We recognize that we own some businesses facing headwinds and that require turnarounds. However, we believe that we also have businesses worth well in excess of what our current stock price implies. The market appears to be penalizing the better-performing businesses in our portfolio for sharing an ownership structure with those that are under pressure.

We believe we can unlock value through active monetization while working to turn around those businesses facing headwinds. At the same time, we can use our balance sheet to continue to return meaningful capital to shareholders while investing in acquisitions that offer the opportunity for attractive future returns for the company.

Just last week, we bought a few excellent brands, including Popular Science, Dwell, Domino and the Business of Home for an adjusted EBITDA multiple that is accretive to our own. I'll quote Ben Graham. The intelligent investor is a realist who sells to optimists and buys from pessimists.

Now let me shift to our first quarter results. Please note that the Connectivity segment is not included in the continuing operations results, which Bret and I are discussing today. Our revenue for the first quarter fell almost 2% versus last year with a decline of approximately 13% in Tech & Shopping, offset by nearly 3% growth in the rest of the company. I'll share some observations about each of our 4 continuing reportable segments.

Starting with Tech & Shopping, lower revenue came as a result of continued and expected traffic pressures across the segment, impacting affiliate commerce and programmatic display advertising. These declines were partially offset by growth in off-platform monetization, licensing and sponsored content. Building upon off-platform success within the tech portfolio, our shopping group has driven its off-platform growth with social video views growing more than 75% year-over-year across Instagram, YouTube and TikTok. We're encouraged that the sequential decline in revenues for the Tech & Shopping segment improved, and we expect each successive quarter in 2026 to be better on a year-over-year basis as compared with the prior quarter.

Gaming & Entertainment had a strong quarter, with revenues up over 7%, driven by a record quarter at Humble Bundle and significant growth in both subscription and performance marketing revenues. Map Genie, IGN's map tools destination for gamers increased views by 24% in Q1. While AI search summaries can impact traditional web article performance, Map Genie's interactive approach offers a unique on-site experience that draws repeat visits. IGN has kicked off a year-long program to mark its 30th anniversary. As part of that, we released the key Audience Insights report, Generations in Play, offering a detailed picture of the evolving consumption habits of today's gaming and entertainment audience.

The findings are already at work inside IMAGINE, our proprietary audience intelligence platform, where they inform how we identify, model and activate audiences at scale for our advertising partners.

While Health & Wellness revenues were up only slightly year-over-year in Q1, it's worth unpacking. We had strong consumer pharma ad revenues in Q1 driven by higher GLP-1 ads and continued positive market reception to our AI-powered data activation tool, HALO. Its audience insights are used to inform campaign design, target audiences and improve performance. We are also seeing momentum in our hospital media network, where we serve as the exclusive digital advertising partner for highly trusted medical institutions.

We just secured a long-term extension of our relationship with the Cleveland Clinic, which now has the highest traffic of any digital consumer health brand. Our AI-powered weight and nutrition management app, Lose It! continued to thrive, posting record Q1 revenues. Our PRIME continuing medical education business also had record Q1 revenues as it expanded into a broader set of therapeutic areas. HCP advertising on MedPage Today, however, fell in Q1 due to bookings delays across certain key pharma clients. MedPage Today bookings for the balance of the year are improving. Pregnancy and parenting revenue also fell due to year-over-year declines in traffic-related programmatic and affiliate commerce revenues.

Cybersecurity & Martech revenues grew nearly 4% year-over-year in Q1, driven by strong performance in the cybersecurity business. In Q1, we significantly enhanced the digital security of IPVanish with the release of Threat Protection Pro, which was designed to provide always on malware protection, whether or not a user has the VPN connected. With this milestone, IPVanish now delivers a full range of privacy, data protection and malware detection to consumers.

VIPRE Security launched a native product integration with Docebo, a leading enterprise learning management system. PhishProof by VIPRE and Docebo delivers targeted security training when employees fail a simulated phishing attack, enabling organizations to implement real-time behavior-based risk reduction.

I want to touch briefly on how we're using AI to transform the way we build products. The traditional software development life cycle was designed around long running, human-driven processes with significant time spent on planning, coordination and process overhead rather than the work itself. The first wave of AI tools largely got bolted on to that same process as assistants.

Advances in the technology now put AI at the center of the development process, drafting requirements, proposing architecture and generating code and tests. As AI handles the routine work, our teams come together in collaborative spaces for real-time problem solving, creative thinking and rapid decision-making. This shift from isolated work to high-energy teamwork accelerates both innovation and delivery with cycles that took weeks now compressed into days.

We're deploying this approach across key product and engineering teams. Over time, we expect this to become a meaningful structural source of operating leverage, providing faster time to market, lower cost per feature delivered and the ability to support a broader product road map without proportionately scaling engineering headcount.

Looking ahead, Ziff Davis is in a strong financial position with a robust portfolio of durable, trusted brands across multiple high-value market segments with significant revenue, adjusted EBITDA and free cash flow, a strong balance sheet and significant investable cash resources, both current and the portion that is pending the sale of the Connectivity business.

With that, let me hand the call back to Bret.

Thank you, Vivek. Let's discuss our financial results. Our earnings release reflects both our GAAP and adjusted financial results for Q1 2026. My commentary will primarily relate to our Q1 2026 adjusted financial results for continuing operations, excluding the Connectivity division and their comparisons to the relevant prior period.

Please see Slide 4 for the summary of our Q1 2026 financial results. Q1 2026 revenues were $267.6 million. This reflects a decline of 1.9% as compared with revenues of $272.8 million for Q1 2025. Q1 2026 adjusted EBITDA was $63.4 million as compared with $71.4 million for the prior year period. Our adjusted EBITDA margin for the quarter was 23.7%, down 2.5 percentage points as compared with adjusted EBITDA margin of 26.2% in Q1 2025. Q1 2026 adjusted diluted EPS was $0.73 as compared to $0.77 in the prior year period.

These results are largely consistent with the Q1 2026 expectations we provided last quarter. When we forecasted overall revenues flat to slightly down year-over-year and a decline of approximately 3 percentage points in our adjusted EBITDA margins, with our adjusted diluted EPS benefiting from a year-over-year drop in our shares outstanding due to our active buyback program.

Slide 5 reflects performance summaries for our 2 primary sources of revenue, advertising and performance marketing and subscription and licensing. Q1 2026 advertising and performance marketing revenue declined 5.1% as compared with the prior period, while subscription and licensing revenues increased by 1.9%. Other revenues increased by approximately $1.8 million year-over-year in Q1 2026.

Slide 6 through 9 reflect the Q1 financial results of each of our 4 continuing reportable segments. Tech & Shopping margins declined due to lower revenue, particularly reflecting a reduction in high-margin affiliate marketing traffic. Gaming & Entertainment margins was slightly lower year-over-year due in part to a larger revenue contribution from the e-commerce business at IGN Store. Health & Wellness margins were lower despite a modest revenue increase. Margins reflect a revenue mix shift due in part to some of the booking delays that Vivek noted earlier as well as a higher revenue contribution in the quarter from the Consumer division. In our Cybersecurity & Martech segment, margins were down year-over-year due in part to revenue mix shifts among the Martech offerings.

Please refer to Slide 10 as we review our balance sheet. As of the end of Q1 2026, we had $520 million of cash and cash equivalents and $100 million of long-term investments. However, please note that these figures exclude approximately $26 million of cash and cash equivalents associated with our connectivity business.

We continue to have significant leverage capacity on both a gross and net leverage basis. We have not included our Q1 leverage ratios on this slide due to the exclusion of our Connectivity business from adjusted EBITDA from continuing operations, and the fact that the receipt of the cash proceeds associated with the transaction is still pending. However, our balance sheet remains strong, and we intend to provide updated leverage ratio information on a trailing 12-month adjusted EBITDA basis, assuming that Connectivity sale is finalized, and we received the proceeds from the sale.

We continue to dedicate significant investable capital to our stock buyback program. During the first quarter, we bought back approximately 1.2 million shares under a 10b5-1 plan. We deployed $51.6 million related to share repurchases in the quarter, including $6.7 million related to stock-based compensation net share settlements. Since April 1, 2026, we have also repurchased approximately 560,000 additional shares in the open market. Cumulatively, since the start of our current buyback program in mid-2020, we have repurchased more than 15 million shares.

The total amount currently available for repurchase under our Board's current buyback authorization is approximately 9.7 million shares, and we plan to continue to be an active repurchaser of our stock. However, as a reminder, given our ongoing review of potential value-creating opportunities, there may be periods of time when we are not able to repurchase shares under this authorization. We did not complete any acquisitions during Q1 2026. In Q2, so far, we have completed one acquisition, which Vivek mentioned in his remarks, and we plan to be a disciplined acquirer in 2026 as opportunities arise to add businesses at attractive prices and offer the potential for strong cash-on-cash returns.

Looking ahead to the rest of 2026, our primary financial objectives remain unchanged. Driving profitable growth, generating robust free cash flow and highlighting the intrinsic value of our businesses to our shareholders. As we noted in our earnings release, we are not providing annual guidance for fiscal 2026 as our exploration of value-creating opportunities is an ongoing process. However, I would like to offer some insight related to certain of our expectations for the balance of 2026.

We expect our Q2 2026 results from continuing operations to largely reflect our performance in Q1 2026. Revenues in Q2 are expected to be down at a slightly higher year-over-year rate than in Q1 and Q2 2026 adjusted EBITDA margins are expected to reflect a similar year-over-year decline in Q2 as compared to Q1 2026. Some of this impact to adjusted diluted EPS will again be offset by a year-over-year reduction in our shares outstanding due to our active buyback program.

Our goal is to return to total year-over-year growth in revenues from continuing operations for the second half of 2026, with the fourth quarter being stronger than the third. This would reflect an improvement in the rate of decline of tech and shopping with modest overall growth from the combined contribution of gaming and entertainment, health and wellness and cyber and martech. This should result in an improvement in adjusted EBITDA margins from continuing operations, allowing our consolidated margin to approach the levels we saw in the second half of 2025.

Margins continue to be a focus of our company. In 2025, our connectivity business was our business with the highest adjusted EBITDA margin percentage, and we are very conscious of the impact that the sale will have on the company's adjusted EBITDA margin from continuing operations. As we continue to pursue valuation enhancement opportunities, we will simultaneously seek to identify opportunities to improve our post-transaction margins through the implementation of new approaches, practices and, in particular, the use of AI.

Turning now to our supplemental information. Slide 13 provides a summary of our adjusted results from continuing operations for each quarter of 2025 as well as the first quarter of 2026. Please note that these figures include approximately $2.8 million of certain overhead expenses in the full year 2025 in our corporate segment, which were previously reported in the Connectivity reportable segment. For a period of time after the closing, a portion of these expenses are expected to be offset by payments received for certain transition services that we expect to provide to Accenture.

Slides 14 through 17 show reconciliation statements for the various non-GAAP measures to the nearest GAAP equivalents.

Slide 18 includes a reconciliation of free cash flow on a combined basis, including the free cash flow associated with the connectivity business. Q1 2026 reflects negative free cash flow of $3.2 million as compared to negative free cash flow of $5 million in the first quarter of 2025. As a reminder, our TDS gift card business is a significant user of working capital in the first quarter of each year.

Overall, during the last 12 months, our free cash flow was nearly $290 million, and our free cash flow conversion from adjusted EBITDA, including Connectivity, was nearly 60%. Please note that in 2026, we expect our conversion rate of adjusted EBITDA to free cash flow to be negatively impacted by certain professional fees and taxes associated with the sale of Connectivity. However, excluding certain discrete items, such as this going forward, we expect continued strong free cash flow conversion of our continuing operations adjusted EBITDA. Overall, we are very pleased with what we were able to accomplish in the first quarter of 2026, and we are encouraged by the revenue growth exhibited by a number of our businesses.

As we move forward in 2026, we remain focused on executing our plans to continue to deliver shareholder value in the coming quarters. And with that, I will now ask the operator to rejoin us to instruct you on how to queue for questions.

[Operator Instructions] And the first question this morning is coming from Cory Carpenter from JPMorgan.

I had two. I wanted to go -- you mentioned the off-platform strategy that you're implementing. Could you just talk about how big -- how far are you along in that off-platform strategy for some of your digital properties? And what are some of the initiatives that you're working on there that you're most excited about?

And then Vivek appreciate your update on capital allocation. Should we think of this as a permanent shift in your strategy? Or is this kind of a temporary thing as you work to refine your portfolio and unlock value with your existing assets?

Yes. Great questions, Cory. So I'll start on the traffic side. And we've had a lot of success in generating monetization out of our footprint on social media. So that's Instagram, TikTok, Snapchat, Facebook, primarily, where if you look at a number of our brands, we have pretty significant follower counts, and we're able to leverage those follower accounts into ad programs and ad revenue. Video is also pretty important to a number of our brands, in particular, IGN.

If you look at the IGN YouTube subscriber base, it's significant. And so that's also a key part of our off-platform activity. But I would also say that we have partnerships. So within the Health business, I mentioned Cleveland Clinic. We also have the Mayo Clinic, and we are working on some other medical partners where we are their advertising, exclusive advertising monetization partner. And then there's e-mail, there's apps. There are a variety of different ways in which we can engage CTV, also is another important one. So it's a pretty diversified set of off-platform traffic.

And as I've said, that can replace the web traffic, the organic web traffic that's under pressure. I will point out 2 things, however, that there is -- and I said this the last time or in the last call, there's certain traffic, particularly the affiliate commerce-oriented traffic when somebody is seeking a buying guide or a product review that is harder for us to replace. The unit economics there are pretty compelling. And then also with respect to platforms, some of these platforms come with essentially a rev share or a tax. And so those are things that our dynamics as we look at this evolution.

On your second question, yes, we do view asset monetization as a new ongoing tool in our kit. And as I said, as long as the public market value of our EBITDA remains low, and it does, we're going to continue to pursue asset monetization. If we see recovery in the public market value of our businesses, then we might find ourselves holding longer. But the overall message is that we view the portfolio as dynamic and ultimately optimized for shareholder value.

Your next question is coming from Robert Coolbrith from Evercore.

I just wanted to ask a little bit on the MedPage bookings. Any more color there? I think generally speaking, throughout the quarter, we've heard about a lot of strength in HCP spend, particularly in rare disease, but just generally. And any competition from any emerging players? Or is that really being sort of managed separately as part of a search budget? Or is that sort of bleed over? And then, Bret, as you look at the strategic review process for other parts of the business, do you think that there is the ability to sort of neatly carve out whole segments? Or is there, in your view, less likely sort of probability of finding a single last dollar buyer for sort of whole segments? Yes, I'll just leave it there.

Yes. So let me start on the question relating to MedPage and then let Bret get in on the second one. So yes, look, we had a tough Q1 for MedPage, I think it's a combination of timing, some very specific advertisers who weren't booking in Q1. Now as I said, we're seeing improvement going into Q2 into the balance of the year. So hopefully, this is largely timing. But at the same time, I think there's just more market entrants.

I think the HCP part, the health care professional part of the pharma ecosystem does have just a number of new entrants in it, and that's adding inventory, I think, to a fairly -- what has fairly been a pretty tight market. And so it is a little bit of a tale of 2 cities, where on the consumer side, we had a very good quarter, a very strong one on the direct-to-consumer side. But on the direct-to-provider side, it was more challenging.

Having said that, the continuing medical education business, which is called PRIME, which operates a little bit differently, not your conventional HCP engagement advertising, that continues to do well for us. So look, it's a mixed bag. As you know, the health segment has been a very strong segment for us for a while now. So I kind of view these as hopefully, temporary glitches in what's going on.

And then I'll just throw in because we're talking about health and wellness and while you didn't ask the parenting and pregnancy piece, that is also one where the traffic challenges, particularly with respect to affiliate commerce within BabyCenter and What to Expect when someone is clicking on to buy a stroller or layette or something like that. That also has had -- the search challenges have presented themselves there. So I'll pause there and let Bret answer the second question.

Thanks, Vivek. And thanks, Robert. I think the way I'd approach this answer is our goal is to pursue a per share value enhancement. And as a result of that, we leave the aperture open for all sorts of pursuits and possibilities, transactions and transaction structures. Obviously, through the sale of Connectivity, that was one of our reportable segments, 1 of our 5 divisions. And the governor is not to limit ourselves to a transaction like that or exclude another transaction like that. The facts and circumstances will present themselves as we pursue different opportunities.

Sometimes it's a reaction inbound, sometimes it's an effort to stimulate inbound. But essentially, the governor is our perception of the implied value of the business based on how our stock is trading versus what the private market value might be. And is there an opportunity to realize that gap in some efficient manner.

Your next question is coming from Ron Josey from Citi.

I wanted to drill down a little bit more on the operations of the business. And I was interested in your comments that a little more than 75% growth in social views for shopping and how you view -- and so I wanted to understand how do you view social's way to manage traffic longer term and other sources of, call it, distribution longer term as we have these call it, traffic headwinds to search?

And then as it relates to AI, your commentary on where we stand and how product development should improve. Talk to us about how this improvement is manifesting or how you can see this build into more products that can lead to even greater actual return and greater growth.

Yes. Great questions, Ron. So I think with respect to what you're referring to the off-platform views or the distributed media, I think what's developed over the last handful of years and maybe potentially sort of underreported is how much consumer engagement. And in fact, we get far more consumer engagement off-platform, meaning outside of the websites we own and outside of the apps we own and get far more engagement for our content in places that we don't. And so you have 2 things happening. I think one is you've seen the shift in consumer behavior. We've all experienced it.

If you look at your screen time. If you use an iPhone, you'll see how much of your time is actually not in the browser and is on these platforms. And so we're going to go with the consumers. And so we've done that. But the other piece that's come together is the ability to monetize that. I think in the early days of social media, it was difficult to figure out how to extract a rent. That has been solved across all of these platforms. And I think the platforms understand that we feed them with high-quality content, high-quality audience and are more than happy to allow us to extract the rent, and they often share in that extraction of rent.

So I think that ecosystem has come together nicely. I think it's been somewhat well timed with some of the challenges we've had, I think, as an industry with search.

On your question around where does what we're doing in AI show up. And I think it's going to show up and has started to show up in product features, and I've talked in the past about things that we have implemented that I think have driven growth at properties like Lose It! and at VIPRE. And then I've talked about HALO and Clara and Imagine and the AI-based ad targeting and insights engines that we've created.

So we've had a number of products that I would call customer-facing, whether it's consumer-facing or market-facing from a B2B point of view, but also from a product and engineering velocity point of view, we have long pipelines across all of our various products of things that we want to have happen and do. And in the past, where we would talk 4 quarters out or 5 quarters out, we're now talking weeks out to push product. And I think that velocity is going to be really valuable in unlocking revenue.

With respect -- and so 1 or 2 things happens. Either we're in a business where the pipeline isn't -- the product pipeline and what we're looking to do isn't deep, at which point this is going to be a cost savings because we're going to be able to use fewer resources to do same or it is very deep, and we're using same resources to accelerate. Either way, we see value creation.

And look, I think the nuance that I was trying to convey in my prepared remarks is that I think at the start of AI, we were viewing it more as sort of "copilot." It is now the pilot. And I think that putting AI at the center of our work really is changing the velocity with which things are happening. So I'm super excited for it.

Your next question is coming from Ross Sandler from Barclays.

Vivek, it's sort of related to what you just answered on that last question, but it sounds like just from 90 days ago, and certainly from last year, we've had a bit of a tone change around internal use of AI to not only kind of push content, but also to manage cost across the organization. So could you just talk about how the thinking might have changed on that?

And then related to the off-platform growing and some of the like kind of legacy affiliate high-margin declining, how does that combined with managing cost vis-a-vis AI impact your view of like operating margins or EBITDA margins across the businesses over the next couple of years? Thoughts on that would be great.

Yes. Look, I think what is -- I don't know if anything's changed in terms of our views around the impact and the positive impact AI can make on our business. I think the toolkit has just improved significantly. I mean it is -- and we're seeing it, I think, across the board, I mean it is pretty extraordinary how much more powerful some of these models have become and their capabilities. So I think that's part of it.

I also think that it's how we are staffing and how we are training our population. We've put a lot of effort into an AI-forward mindset across the entire company, and I think that's starting to engage. And then I think, look, I think as things succeed in some parts of the portfolio -- other parts of the portfolio, we have a very good, healthy internal competitive dynamic inside the company. People see things that are happening in one place and want to see them replicate. So I think this is only going to improve, tell you that I think we are really focused on bringing in every new hire we're making is very AI-native hire. So I think that's a very important perspective as well.

I think on your questions around margin, look, this is the trick. We've always been a very margin-focused company. As Bret pointed out, with the pending close on the Connectivity business, that was our largest margin business. And so we're going to look to try to improve margins in the businesses we own, notwithstanding some of the pressures around high-margin revenues being replaced by lower margin but still very good margin businesses. Look, our free cash flow orientation is built into the DNA of the company. It is how we think. It is how we value potential acquisitions. It is honestly the source of all of our capital allocation, right? I mean, this is what we do.

We generate free cash flow, and we recycle that free cash flow, whether it's share repurchases or it is acquisitions of companies or capital investments in our business. So look, I don't -- I think our -- we're very focused on, we're a margin-first probably company, maybe more than anything else, and we recognize these dynamics that we're going to work through.

Your next question is coming from Shyam Patil from Susquehanna.

This is Daneal on for Shyam. I was just wondering if you could elaborate a bit on the acquisitions of Popular Science, Dwell, Domino and Business of Home. Just what was the rationale behind these deals? And how do you see Ziff Davis adding value to these businesses in the coming years?

Yes. So look, I think that -- you've heard me talk about this a lot. I'm a big believer in the value of brands. It is very hard, particularly in today's market to build brands. And so when you get a brand like Popular Science, which was founded 150 years ago, arguably the most famous, well-known science media brand ever, you get excited about that, and we're going to incorporate it into our tech group where science has always been an area of interest for our audience. And so I think it's a natural tuck-in for our CNET group. And then for the home and lifestyle brands, Dwell is a great architecture oriented brand. Domino is a great interior design brand, Business of Home. Anyone that's in the trade knows it, reads it and will swear by it.

And so getting into a category at all brands, by the way, Dwell and Domino in particular, with a very, very strong social footprint. And so from our point of view, I think helping those businesses unlock the social value that is, I think, embedded into these brands as well as unlocking other product development opportunities that exist within those spaces. And look, I think in the end, I think I pointed this out, this was from an acquisition price point of view, a very attractive one for us.

And so that's one thing that I'll say is that the market fears to us present a really unique opportunity to be an active buyer in the space. I mean, the valuations are compelling. And while these businesses are experiencing headwinds, not unlike the ones we're experiencing, I think we're showing some resilience, and we're showing the ability to manage through, transform and come out the other side with very, very valuable assets. And back to this as a manager of assets inside of the company, these are assets that I'm excited for us to own.

There are no further questions in queue at this time. I would now like to hand the call back to Bret Richter for any closing remarks.

Thanks, Tom, and thank you all for joining us today on our Q1 2026 earnings call. As always, we value your time and investment in our company, and we look forward to continuing to engage with you in the coming months.

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

Good afternoon, ladies and gentlemen, and welcome to the Ziff Davis Investor Update Conference Call. My name is Paul, and I will be the operator assisting you today. [Operator Instructions]

On this call will be Vivek Shah, CEO of Ziff Davis; and Bret Richter, Chief Financial Officer of Ziff Davis.

I will now turn the call over to Bret Richter, Chief Financial Officer of Ziff Davis. Thank you. You may begin.

Thank you, Paul. Good afternoon, and welcome to our investor call to discuss Ziff Davis' recent announcement regarding our Connectivity business. As the operator mentioned, I am Bret Richter, Chief Financial Officer of Ziff Davis, and I am joined by our Chief Executive Officer, Vivek Shah.

After brief prepared remarks, we will be conducting a Q&A session. The operator will provide instructions regarding the procedures for asking questions. In addition, you can e-mail questions to [email protected].

First, allow me to read the safe harbor language. This call will include forward-looking statements. Such statements may involve risks and uncertainties that could cause actual results to differ materially from the anticipated results. Some of those risks and uncertainties include, but are not limited to, the risk factors that we have disclosed in our SEC filings, including our 10-K filings, recent 10-Q filings, various proxy statements and 8-K filings. We refer you to the discussions in those documents as well as in our press release regarding safe harbor language and forward-looking statements.

And with that, I'd like to turn the call over to Vivek Shah, Chief Executive Officer of Ziff Davis.

Thank you, Bret, and good afternoon, everyone. As we announced today, we have entered into a definitive agreement to sell our Connectivity business to Accenture for $1.2 billion in cash. This is a transformative deal for Ziff Davis, representing a significant realization of value for our shareholders and a concrete illustration of the quality of the underlying businesses in our portfolio. We've been consistent in our view that the market does not fairly value our company and have been and remain committed to addressing this discount.

The sale of Connectivity represents a valuation of approximately 14.5x its 2025 adjusted EBITDA less CapEx and over 5x its 2025 revenues. Just to frame the magnitude of this deal, the sale price is greater than the pre-announcement market cap of the whole company, even though the remainder of the company generated approximately $385 million of adjusted EBITDA in 2025.

We expect the transaction to close in the coming months, contingent upon certain closing conditions. I'd like to thank our colleagues at Connectivity, especially its President, Stephen Bye, for building a terrific business that delivers best-in-class network intelligence and optimization solutions to service providers, enterprises and regulators all around the world. The Connectivity team is thrilled at the prospect of joining Accenture, a leading global solutions and services company.

Following the closing, we will evaluate the best use of proceeds for the benefit of our shareholders. Possible options include reevaluating the leverage on our balance sheet, repurchasing shares, exploring dividends and reinvesting in our businesses through M&A or other general corporate purposes. We believe that the fear in digital media markets presents us with a number of opportunities. While we've experienced the headwinds, we've also shown remarkable resilience in the face of these pressures and believe we have a great track record in business transformation and value creation.

Just as we were the company that successfully navigated the shift from analog to digital, we believe we have the people, platforms and experience to navigate the AI shift. It's not often we get to speak in detail about investment returns in our M&A program, given that asset sales have historically not been common at Ziff Davis. But with this transaction, it's worth sharing some details.

We started the Connectivity business with the acquisition of Ookla in 2014. It was largely an advertising-based business at the time, but we could see its potential as a subscription-based data business. Over the years, we made several important tuck-in acquisitions, including Downdetector, RootMetrics and Ekahau. We spent approximately $380 million on acquiring Ookla and its tuck-ins and generated an estimated $650 million of cumulative adjusted EBITDA less CapEx since the original acquisition. As a result, this sale represents an approximate multiple on invested capital, or MOIC, of 5x and an estimated unlevered pretax IRR in excess of 25%.

Unless you think that Connectivity is an anomaly, I point you to some of our divisions that have had similar or even stronger growth rates. As such, if the market discount in our stock persists, we will continue to consider value-creating opportunities for other parts of the company, especially those that would allow our businesses and their employees to thrive and continue to grow.

As I mentioned on our third quarter earnings call last November, when we first announced our exploration of value-creating opportunities, we feel an obligation to reward investors for their patience. With this transaction, I believe we will be able to do just that by unlocking some of the intrinsic value in our company.

And with that, I will now ask the operator to rejoin us to host the Q&A.

[Operator Instructions] And the first question today will be coming from Shyam Patil from SIG.

Congrats on the sale. Vivek, you've shown over the years, just your ability to buy, scale and monetize assets and you've kind of on various ways, whether it's through a spin with Consensus and now kind of a sale. I had a couple of questions.

First one, can you talk about the sales process a little bit, just how competitive it was? And then second, how do you view the Ziff Davis strategy from here? Or how should we view it? You talked about various ways in which you can use the cash. You obviously have a lot of cash. You could lever up as well if you wanted to. But how excited are you about deploying meaningful cash into M&A and kind of repeating the process that you did with Connectivity and I'm assuming you do with other assets as well?

Yes. No, thank you for the question. So let me start just on the first part of that. Look, I think we should probably just focus on outcome, not process, because the outcome we are very, very happy about. We're happy on a lot of levels.

Obviously, the transaction, as I said, is transformative. I think we have found a great home for the business and a great home for the 450 employees that work within the Ookla division. And so I think through a lot of hard work and through great support internally and externally, I think we came to a great place.

As we think about the future, I think your question around the company and its focus and strategy, look, I think what will remain is a more focused but still very much a diversified portfolio of Internet businesses where we see operational upside, but also opportunities to unlock value. And so look, as I said, and it's just worth reiterating, I think every one of our segments is underappreciated. And so we're going to work hard to address that. And I think one of the messages that hopefully, shareholders get, and I'm thankful that you brought up the spin-off of Consensus, which took place in 2021 is that when we are confronted as a company in these moments where we just see dislocation and where we see significant discount, we're going to act. And so I think maybe that's the most important message here.

In terms of the specific use of proceeds, I think every option is very much on the table. And so we're going to consider it. We want to get to obviously getting to close. And at that point, I think we'll have probably a sharper perspective maybe for you and the investment community in terms of what we're going to do.

And the next question will be from Rishi Jaluria from RBC.

Great to see some credit finally being given to your stock after such a long period of time. Maybe I want to hit on kind of a tangential piece here, which is I think it's very clear from the Connectivity/Ookla transition that there is a treasure trove of data sitting as part of your portfolio. Clearly, I think with Connectivity, it's not just the asset, it's -- the data clearly is incredibly valuable.

As I look through your portfolio and see all these different assets, whether it's health care or even Moz or whatever, there's a lot of value of the data. How should we be thinking about your opportunities maybe outside of the core of monetizing the data, whether it's something like this and other companies realizing the value of the data assets or you yourself finding whether it's licensing deals or packaging or anything like that to really capture that? Because it really feels as we think in this AI world, there is increasing value being placed on data. So maybe help us understand your perspective there.

Yes. No, it's a great question, and I'm grateful you bring it up because I do believe that part of the story here is that, look, the portfolio consists of very valuable businesses, and I don't believe the Connectivity business is an anomaly. I think the rest of the company also has businesses that the market needs to maybe spend a little bit more time with and maybe gain a fuller appreciation of.

Part of that process is what you just described, Rishi, which is we do sit on very valuable data assets. And the most obvious one, at least with respect to our content businesses, is the vast library of intellectual property and copyrights that we own and a library that gets added to every single day through the hard work of our journalism organization. And so we fundamentally believe, and you know that the company obviously is in litigation to ensure that there is appropriate value placed in the marketplace for that data, for that content, because it informs both the training as well as the grounding and fine-tuning for these models that have become transformative within the business landscape.

So what I would say is that's a data set. But then I think beyond that, there are audiences. And I think what you're pointing at is we have audiences with incredible intent, web audiences, social audiences, audiences on platforms like YouTube, that's a real asset. And reaching audiences at the level and scale that we do creates all kinds of optionality. And you see it in segments like gaming and entertainment, where we've done a very good job of leveraging media audiences into direct-to-consumer transactions through the Humble storefront, through Humble Bundle and Humble subscriptions. Just one example.

So I think audience represents a significant asset. And look, I think as it gets harder to get sort of reach -- human reach and human stories, I think that just becomes even more valuable. So I agree with you that, I think, across all of our businesses, even in the cybersecurity and martech business. And I think, Rishi, you know about some of the data that sits there, and we've talked about it at some of your -- at your conferences.

So look, I'm hoping what comes out of this is more than just the math of what does the Connectivity sale represent, and that's some of the action we saw today. But let's be very clear. The remainder of this company is still valued in the current stock price at a significant discount. And to me, that needs to get corrected.

The next question will be from Ross Sandler from Barclays.

Maybe one for Bret, just a housekeeping question. So it sounds like you've got an $800 million gain based on that $382 million that Vivek mentioned. So just how should we think about post-tax proceeds and any -- I don't think you have a lot of NOLs, but any other nuances there that we should think about?

And then Vivek, to your last point you just made, even after this, at $42 where we closed, I think the Street's got you at around 3-point-something times EBITDA on all the RemainCo roughly. So if we stay here, how does it change the company's appetite for maybe selling other things that might be in that like Connectivity is clearly a winner that had a great fundamental momentum over the last couple of years. And I would say like health care would be another similar type of backdrop versus some of the other kind of turnaround businesses in tech and gaming. So how should we think about the RemainCo and conversations that you guys have been having around those assets?

Thanks, Ross. I'll take the first one. So I appreciate the quick math you did, but I might just put forth, basis ends up being a little bit more nuanced than just the dollars invested over time, earnings, distributions, contributions. What I would say is, first and foremost, we'll determine the net proceeds at closing. Our basis will change based on all those factors just between now and when we close the transaction.

We do expect to have some basis. I am afraid it's not quite as high as our dollar invested. And of course, any gain will be based on our estimated tax rate. But we also have been and we'll continue to look at tax planning strategies that may allow us to reduce cash taxes further.

More to come on that, and we'll update you when we have more definitive views.

And look, I think, Ross, your rough math is the rough math that I myself have done. And so look, my view and the company's view on our strategic process is that it won't end until the clearing discount in our stock price ends. So look, today's move was good. It was good to see, but we're still nowhere near where we think an appropriate valuation of the assets inside of this company. So a very clear answer is we're going to continue to be open-minded if the market continues to, I think, unfairly value the businesses that are inside of the company.

I may make one slight correction to your characterization of the businesses. I will tell you that with the exception of tech and shopping, all of the other segments are growing and have been growing. And so to me, whether it's gaming and entertainment, health and wellness, cybersecurity and martech, in aggregate, these segments have done well. But on a disaggregated basis, too, there are businesses inside of each of these segments that are quite attractive.

So look, I think, again, we are motivated by the per share price of the company and recognizing that, that's what really does matter to our shareholders and being flexible and open-minded and willing to do the work and invest the time to understand what the possibilities are. That's not going to stop.

There are no further questions in queue at this time. I would now like to hand the call back to Bret Richter for any closing remarks.

Thank you, Paul, and thanks, everyone, for joining us today, particularly on short notice. We continue to appreciate the time you're investing in the company, and we look forward to speaking with you over the next couple of months. I also want to thank -- I know there's a few analysts who listened in and were unable to ask questions. We very much appreciate your contributions. Have a good day.

Thank you. This does conclude today's conference call. You can disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

Good day, ladies and gentlemen, and welcome to the Ziff Davis Fourth Quarter and Year-End 2025 Earnings Conference Call. My name is Tom, and I will be the operator assisting you today.

[Operator Instructions]

On this call will be Vivek Shah, CEO of Ziff Davis; and Bret Richter, Chief Financial Officer of Ziff Davis.

I will now turn the call over to Bret Richter, Chief Financial Officer of Ziff Davis. Thank you. You may begin.

Thank you. Good morning, everyone and welcome to the Ziff Davis Investor Conference Call for Q4 and fiscal year 2025. As the operator mentioned, I am Bret Richter, Chief Financial Officer of Ziff Davis, and I am joined by our Chief Executive Officer, Vivek Shah.

A presentation is available for today's call. A copy of this presentation and our earnings release is available on our website. www.ziffdavis.com. You can also access the webcast from this site. When you launch the webcast, there is a button on the viewer on the right-hand side, which will allow you to expand the slides. After completing the presentation, we'll be conducting a Q&A. The operator will provide instructions regarding the procedures for asking questions. In addition, you can e-mail questions to [email protected].

Before we begin our prepared remarks, allow me to read the safe harbor language. As you know, this call and the webcast will include forward-looking statements. Such statements may involve risks and uncertainties that could cause actual results to differ materially from the anticipated results. Some of those risks and uncertainties include, but are not limited to, the risk factors that we have disclosed in our SEC filings, including our 10-K filings, recent 10-Q filings, various proxy statements and 8-K filings as well as additional risks and uncertainties that we have included as part of the slide show for this webcast.

We refer you to discussions in those documents regarding safe harbor language and forward-looking statements. In addition, following our business outlook slides, our supplemental materials, including reconciliation statements for non-GAAP measures to their nearest GAAP equivalent.

Now let me turn the call over to Vivek for his remarks.

Thank you, Bret, and good morning, everyone. For the full year 2025, Ziff Davis grew revenues 3.5%, adjusted EBITDA grew slightly, and the company generated almost $290 million in free cash flow. Given the headwinds that some of our businesses experienced, we're glad to have produced a year of growth, however, modest. We deployed $174 million, about 60% of our free cash flow and share repurchases throughout the year as we continue to view our own stock as a highly attractive investment.

In the fourth quarter, we experienced a 1.5% drop in revenues and a 5% decline in adjusted EBITDA due to an 18% decline in our Tech & Shopping segment, offset by growth of over 6% in our 4 other segments. Tech & Shopping's revenues declined largely due to a drop in web search traffic which had a meaningful impact on our affiliate commerce revenues. As a reminder, we earn affiliate commissions when a user clicks from 1 of our sites to a partner merchant site and makes a purchase. The highest quality referral traffic for an affiliate commerce business comes from search engines, which are generating lower referrals for us.

We believe we can contain the damage through alternative sources of engagement over time as well as growing our video advertising and licensing businesses. In fact, the CNET group saw video and social views grow 100% in Q4 and over 80% for full year 2025 to 1 billion views. Gaming and Entertainment revenues grew 1.5% in the fourth quarter, consistent with its full year growth rate. Humble Bundle Storefront had its best revenue quarter in 5 years. Humble Bundle achieved a huge milestone in Q4, celebrating its 15-year anniversary and over $275 million raised for charity to date.

IG and Entertainment social growth and engagement continued in Q4 with Facebook views up 22% to 300 million and views on x up 19% to 45 million. IG and Store, which sells collectibles and gaming-related products saw its total sales tripling between the store and Humble Bundle, our direct-to-consumer revenues reached almost $90 million in 2025. Health & Wellness segment finished a year of record revenue and adjusted EBITDA with a strong Q4, growing year-over-year revenues 8.6%. Our AI-powered data activation tool Halo has now become a standard part of all of our pharma RFPs. Halo audience insights are used to inform campaign designed to better engage target audiences, which leads to improved campaign performance.

And it's all accomplished in a privacy safe way. Our Consumer Health business grew due to increased ad spend from core pharma clients, including new GLP-1 campaigns and growth in subscriptions for our Lucid weight loss app. We believe that our Lucid business is benefiting from the rapid market penetration of GLP-1 prescriptions as it's seen as an adjunct therapy to promote healthy eating. Our professional business also had a strong quarter, driven by growth in the prime continuing medical education business. Connectivity also had a record fourth quarter with revenues up 11%.

Speed Test, Downdetector and RootMetrics all experienced strong year-over-year growth in Q4, driven by new customers and increased service adoption by existing customers. Ekahau also produced solid year-over-year growth in Q4 with both enterprise and broadband service providers. Connectivity rolled out a major new product, SpeedTest Pulse in the fourth quarter. Pulse is a handheld diagnostic device that empowers field technicians to instantly validate network installations and troubleshoot complex WiFi issues on the first visit, driving operational efficiency, and reducing costs. This launch follows the introduction of SpeedTest certified, an independent network verification program that awards globally recognized badge of excellence to commercial venues, allowing them to monetize their superior connectivity performance as a marketing asset to attract high-value guests and tenants. Both products are expected to contribute to meaningful growth in 2026.

Cybersecurity & Martech revenues grew 2.7% in Q4. Growth was driven primarily by the cybersecurity vertical with strong organic performance from consumer VPN and cloud backup. Our momentum in cybersecurity reflects product enhancements, including the addition of threat protection and secure browsing to the IPVanish VPN and the launch of Viper integrated e-mail security, which is powered by an AI engine that detects threats such as email compromise. Within the Martech vertical, we see opportunities to help brands profitably acquire and engage customers. Our e-mail business with its focus on first-party data and e-mail and SMS communication at Semantic Labs with its focus on efficient customer acquisition from paid traffic are both working to deliver on this value proposition.

As we disclosed in our last earnings call, we have engaged outside advisers to assist us in assessing how certain potential transactions can unlock greater shareholder value. Our evaluation of potential strategic opportunities remains ongoing. As a result of that process, we have decided to defer issuing formal guidance at this time. But I do want to share some high-level thoughts about the outlook for our businesses in 2026.

First and foremost, we are intently focused on delivering profitable growth and strong free cash flow generation in 2026, building on 2 consecutive years of great cash generation. While we effect Tech & Shopping revenue to continue the trend of double-digit revenue decline in the first half of 2026. We are forecasting improvements in the second half of the year via a combination of favorable year-over-year comps and benefits from increased all platform engagement and growth in our licensing activities. For the year, we are expecting Tech & Shopping to be down mid-single digits in revenue.

While we work to turn Tech & shopping around, we're confident in our ability to continue to generate growth in our 4 other segments. In gaming and entertainment, Health & Wellness and Cybersecurity & Martech we expect revenue growth of low to mid-single digits for full year 2026, and we anticipate continued double-digit revenue growth at connectivity. Adjusted EBITDA margins for the company should continue to hover around 34%. I know there's a great interest and updates regarding AI content licensing, and I wanted to share some observations. We are actively engaged in discussions with key players and the nature of these dialogues reinforces our confidence in the future revenue opportunities for content licensing. However, we are taking a deliberate principled approach to execution.

The market is still defining the framework for appropriate compensation. specifically distinguishing between content used for model training, versus content used for retrieval augmented generation or RAG. Our position is consistent both use cases require proper licensing. We will not enter into RAG-focused agreements that compromise our rights to fair compensation for foundational training. These are separate use cases with distinct value propositions. And our authoritative content must be valued accordingly in both contexts. We anticipate greater clarity on these fundamental licensing questions following the resolution of our ongoing litigation. Once established, we believe this clarity will unlock licensing opportunities and allow us to move forward with agreements that appropriately reflect the full value of our content across all AI applications.

With that, let me hand the call back to Bret.

Thank you, Vivek. Let's discuss our financial results. Our earnings release reflects both our GAAP and adjusted financial results for Q4 and fiscal year 2025. My commentary will primarily relate to our Q4 2025 adjusted financial results in the comparison to prior periods.

Let's turn to Slide 5 for the summary of our Q4 2025 financial results. Fourth quarter 2025 revenue was $400 million and $6.7 million as compared with revenue of $412.8 million for the prior year period, a decline of 1.5%. Fourth quarter 2025 adjusted EBITDA was $163.2 million as compared with $171.8 million for the prior year period, reflecting a 5% decline. Our adjusted EBITDA margin for the quarter was 40.1%. We reported fourth quarter adjusted diluted EPS of $2.56. This figure reflects the impact of our active share repurchase program.

Turning to Slide 6. Let's review our fiscal year 2025 results. Fiscal year 2025 total revenue increased 3.5% to $1.453 billion as compared with the prior year. fiscal year 2025 adjusted EBITDA increased year-over-year to $495.1 million. Our adjusted EBITDA margin for fiscal year 2025 was 34.1%. Adjusted diluted EPS was $6.63, up slightly as compared with fiscal year 2024. During a number of our recent quarterly calls, we have discussed how our games publishing business has negatively impacted our recent financial results. This was true again in the fourth quarter of 2025 as Game Publishing contributed negative net revenue of $2.5 million. However, during the fourth quarter, we took action and sold our Game Publishing business in a transaction that allowed us to recognize a book and cash tax savings associated with the loss related to the sale of the business while maintaining the right to certain future payments tied to the performance of the assets under their new management.

We did not attribute value to these payments at closing and as a result, we will recognize them as investment gains if and when we receive them in the future. Our exit from Games Publishing achieved multiple benefits including the elimination of the distractions associated with this noncore business line, which has also caused significant volatility in the quarterly results of our Tech & Shopping segment. Please note that this exit has no impact on the Humble Bundle Storefront in our gaming and entertainment segment.

Slide 7 reflects performance summaries for our 2 primary sources of revenue, advertising and performance marketing and subscription and licensing. Q4 2025 advertising and performance marketing revenue declined 4.4% as compared with the prior year period, while fiscal year 2025 advertising and performance marketing revenue increased 5.9% as compared with 2024. Q4 2025 subscription and licensing revenue increased 4% as compared with the prior year period and fiscal year 2025 subscription and licensing revenues increased 2.2% year-over-year. Q4 2025 other revenues declined by $600,000 year-over-year and fiscal year 2025 other revenues declined by $9.2 million. These changes both primarily reflect the impact of the Games Publishing business.

Slides 8 through 12 reflect the quarterly and full year financial results for each of our reportable segments, which Vivek has already discussed in some detail. I will note a few additional items. 3 of our 5 segments grew full year revenues in 2025 and 4 of our 5 segments grew revenues in the fourth quarter. The now exited games publishing business reduced Tech & Shopping segment revenues by $2.5 million in the fourth quarter and by $4.9 million in full year 2025. However, the 2025 year-over-year revenue decline associated with the Games Publishing business was approximately $14 million, reflecting an approximately 1% drag on consolidated revenue growth. This revenue decline also had a high negative flow-through impact to adjusted EBITDA.

Please refer to Slide 13 to review our balance sheet. As of the end of 2025, we had $607 million of cash and cash equivalents and $93 million of long-term investments. We also have significant leverage capacity on both a gross and net leverage basis. At year-end, gross leverage was 1.8x trailing 12 months adjusted EBITDA and our net leverage was 0.5x and 0.3x, including the value of our financial investments. During the fourth quarter, we bought back 1.75 million shares for $60.6 million. In fiscal year 2025, we deployed nearly $174 million to repurchase approximately 4.8 million shares and during the course of 2025, we reduced the number of shares outstanding by more than 10%.

Since January 1, 2026, we repurchased approximately 740,000 additional shares and we believe that the current valuation level of Ziff Davis' stock, share repurchases continue to offer an attractive use of our investable capital. Our recent share repurchase activity nearly exhausted our existing stock repurchase authorization. However, this week, our Board of Directors increased our stock repurchase authorization by 10 million shares, bringing the total amount currently available for repurchase to 10.7 million shares. This authorization is valid until February of 2036.

Please note that given our current active review of potential value-creating opportunities, there may be periods of time where we are not able to repurchase shares under this authorization. During 2025, we closed a total of 7 acquisitions across our businesses, investing a total of $68.7 million net of cash received to support our M&A program. We anticipate we will continue to be an active and disciplined acquirer in 2026 as opportunities arise to add capabilities to our businesses in an accretive manner.

Looking ahead to the balance of 2026, we are intently focused on delivering profitable growth, robust adjusted EBITDA margins and strong free cash flow generation. As Vivek discussed, due to our current review process, we are not providing formal full year 2026 guidance at the present time. However, I'd like to offer some insight related to our expectations for the first quarter of 2026. We expect first quarter 2026 consolidated year-over-year revenue growth to be relatively flat or slightly negative. As the continued headwinds in the affiliate commerce revenues in our Tech & Shopping division that ebec noted earlier, are expected to largely offset the growth in the balance of our businesses.

Given seasonality, our Q1 adjusted EBITDA margins are typically lower than our fiscal year margins and Q1 2026 margins are expected to be about 3 points lower year-over-year, primarily reflecting an anticipated year-over-year decline in Tech & Shopping revenue, a lower margin revenue mix at Health & Wellness and the continued investment in growth in connectivity. However, Q1 adjusted diluted EPS will benefit from year-over-year drop in our shares outstanding due to our active buyback program. Our supplemental materials include reconciliation statements for our non-GAAP measures to their nearest GAAP equivalents.

Please see Slide 25, which includes a reconciliation of free cash flow to net cash provided by operating activities. Our businesses continue to produce robust free cash flow. 2025 free cash flow was $287.9 million, up $4.2 million as compared with 2024. Q4 2025 free cash flow of $157.8 million was up significantly from $131.1 million in Q4 2024. And fiscal year 2025 free cash flow reflects 58.1% of our 2025 fiscal year adjusted EBITDA of $495.1 million.

Stepping back a bit, Ziff Davis has made considerable financial progress over the last few years despite a challenging operating environment. Since the end of 2022, the first full year after the consensus spin-off, we have grown free cash flow by 25%, reduced our gross debt levels by nearly 14% and lowered our year-end shares outstanding by more than 18%. During this time, we also deployed more than $300 million for 13 acquisitions, adding capabilities across all of our operating segments. And as Vivek noted earlier, we are actively working to pursue opportunities that we believe offers strong prospects to realize additional shareholder value. Although there is no assurance of any future transactions, we continue to believe that our current trading levels do not fully appreciate the intrinsic value of our businesses. We will seek to provide timely updates as appropriate.

With that, I will now ask the operator to rejoin us to host our Q&A.

[Operator Instructions]

And your first question this morning is coming from Rishi Jaluria from RBC.

Wonderful. Maybe just 1 for me to keep it. But Vivek, I wanted to expand a little bit on some of the AI search tailwinds that you talked about on Tech & Shopping. Maybe can you expand a little bit in terms of how that's progressed. This is obviously a trend we've been discussing for a while. Some of the investments that you can make to maybe capitalize on the AI search opportunity and take that kind of segment back to a better growth trajectory. And then if we think about AI search throughout the rest of your businesses, are there other parts that have proven to maybe be a little bit more resilient, whether it's health care or gaming or whatever? Maybe any color you could give as to potential that would be helpful.

Thanks, Rishi, for the question. And so yes, look, what I would say is, generally speaking, a lot of traffic is fungible, meaning that lost her traffic can be and has been made up with other sources of engagement, apps, social traffic, video, programmatic traffic and e-mail. So the degree to which in any of our segments in the Gaming and Entertainment and Health & Wellness segments, in particular, we're able to offset search traffic declines, where that has become really hard is within Tech & Shopping because the 1 type of traffic that really is hard to replace as high-intent consumers who arrive via search looking for a product or a service, and then clicking through to make a purchase. That's the affiliate commerce and affiliate commission business.

And so that particular traffic is harder to replace though, I'll talk about things that we're doing to offset, but that is harder to replace, and that is very much concentrated in our Tech & Shopping segment. In fact, just to dimensionalize it a little bit. So we did in 2025, roughly $90 million in affiliate commerce commissions related to organic traffic. That was down about $25 million year-over-year, and half of that $25 million was in Q4. So it gives you a sense of kind of the impact and what's going on within Tech & Shopping. From an offset point of view, and as I said, look, I think this is something that will start to materialize in the second half of this year, app traffic, browser extension, traffic and then other forms of monetization outside of affiliate commerce around video, licensing events and broader display.

So a variety of things at mix, but -- the high level is where we're seeing search challenges show up, we're really seeing it within this Tech & Shopping segment.

Your next question is coming from Ross Sandler from Barclays.

Yes. That was really helpful on that $90 million. So that's about 25% of that segment's revenue in 2025. Could you just talk maybe about like the percent of traffic like -- and when we see -- it sounds like from your guidance, the kind of unwind of SEO traffic is peaking right now. And by the second half of '26, it should be less of a headwind. Is that the right way to think about it?

And then the second question is just on the 300 bps of margin contraction in the first quarter. I guess just how do we think about in light of the declining kind of high-margin SEO-related traffic, how do we think about your ability to kind of contain the cost structure and these margins kind of moving forward?

Yes. Thanks, Ross. I'll answer your first 1 and then ask Bret to share some comments on the second one. But -- so just taking a step back, Tech & Shopping, obviously, is the challenge -- was the challenge in Q4, will continue to be the challenge in 2026. I don't want to lose sight of the fact that the other 4 segments grew nicely in Q4 of 2025. And we believe we'll continue to grow in 2026. Within Tech & Shopping, the affiliate commerce piece is 1 of what I would refer to as free challenges within the business and worth describing and talking about the other 2 for a moment.

So remember, we have the B2B business that's inside of the Tech & Shopping segment. You'll recall that our strategy in 2025 was to intentionally contract revenue at a rate that would be less than the contraction of expenses. In other words, we would cut more expenses than revenues and we did that. So in 2025, the B2B revenues were down $11 million year-over-year, but the EBITDA was up close to $6 million in positive. So that strategy of shrinking the footprint of that business cutting out certain products and service lines has worked, but shows up as a revenue drag. I just want to point that piece out.

The last 1 is the published -- the game publishing business, that's still a residual business that stayed within Tech & Shopping, which Bret pointed out, we sold were out of that was like a $14 million year-over-year bad guy in 2025 as well. So those are just 2 things to just point out as we think about '26 versus '25 in that as we lap these things are going to be beneficial. But then, yes, look, I think the belief that the pain that we're seeing on the affiliate commerce side, in Tech & Shopping will start to improve in the second half, both because of comps as well as other initiatives, again, video monetization, licensing, building out traffic in both the retail app and browser extension. And that collection brings the overall challenge of Tech & Shopping to being sort of more of a -- from a full year point of view, kind of a low single-digit decline, but still a decline.

And Ross, I think on margins, I think what I'd say is almost widen the lens for a moment, if you look back over the last several years, despite various puts and takes in the business, we've been able to largely maintain margin. It's been a deliberate effort across the company, looking at the way we do business as business dynamics change, I think, as that pointed out, with the InteCon shopping, we've recently shown on our ability to do that in B2B, which has been a consistent source of revenue pressure for the last several years and taking action to look at how we run the business and maintain margin and produce margin, taking some actions on some drags like Humble games.

And then in the first quarter, I think what we're largely looking at is just the flow-through impact of some of that revenue softness, coupled with a little bit of mix change in some of the other businesses. And then as we look at -- I'm sorry, as we look at the company overall for fiscal year '26, as Vivek noted, in our view, it's kind of a little bit of a first half, second half story. And overall, if we progress as sort of anticipated, we think we will be in the range of delivering on what we said.

[Operator Instructions]

Your key pad your next question is coming from Shyam Patil.

I had 1 on Tech & Shopping and 1 on M&A. Just on Tech & Shopping, Vivek, I know you guys had talked about there being a lot of moving parts in that business for this year. But how do you think about kind of what's the right growth rate or growth range for that business going forward, not just in '26, but just from a high-level perspective, what kind of growth rate do you think that business should have margin profile as well?

And then on M&A, where do you see opportunities this year for M&A? Just kind of curious which segments, which pockets?

Yes. No, great question, Shyam. So I'll start on the long-term outlook on Tech & Shopping. And I don't believe it should be very different than our other digital media segments, principally gaming, entertainment and Health & Wellness. And so I think it should be a mid-single-digit grower. But again, I think we have to get through this phase where the search challenges within the affiliate commerce business that, by the way, was a business we created from scratch when we first bought the assets that make up a lot of this segment.

And so look, we were very successful in creating a new form of monetization when we initially acquired a lot of the assets in this category. And I think we're very confident that we will find new forms of monetization within these brands. And by the way, when we talk about Tech & Shopping, we're talking about market-leading brands, CNET Group and RetailMeNot Group are leaders in their respective categories of technology and shopping.

With respect to M&A, Look, we believe that the market fear in digital media is actually presents us with a pretty unique opportunity to be an active buyer in this space. Look, the valuations are compelling. You see our own, and we're an at-scale diversified entity. You can imagine what businesses that don't have our scale and diversification, they ultimately trade for. And I think there's -- I think the fear is overly pronounced. And while there are certainly headwinds and we're experiencing those within our business, we've shown a fair amount of resilience in the face of these pressures and believe we've got a pretty good track record in business transformation and managing these really high-quality brands. And that's the key is -- our focus from an M&A point of view are really high-quality brands in high-value categories.

So look, we've got the cash, we certainly have the free cash flow generation. And so we're going to continue to look for attractive opportunities. And so I think both things can be true, by the way, that we can be very focused on opportunities within the M&A landscape while we continue in the strategic review process to unlock value for shareholders.

Your next question is coming from Danny Pfeiffer from JPMorgan.

For the first, as you have discussions with outside advisers on the sales businesses, can you provide any color on what divisions prospective buyers have been looking at the most?

And then for the second putting the AI headwinds aside, can you provide us with an update on the broader trends you're seeing in the ad market today?

Yes. So listen, look, we wish we could share more -- but look, as we said in our prepared remarks, it's an active process. We promise and we're going to provide updates as and when we're able to. But right now, that's all I can really say at this point. .

On your question about the ad market, and I often say, look, for us, at least, the ad market is not 1 market, it's free. And I would say that if you unpack each of those, so we take gaming and entertainment last year, roughly 5% ad revenue growth, I think that will be consistent going into 2026. Health & Wellness had a very strong double-digit advertising growth rate in 2025. I think that will moderate a bit, be more sort of mid-single-digit range. Remember, in 2025 for us within the Health & Wellness business, we had some acquisitions that accelerated some of that revenue growth. So the organic, I think is mid-single digits. So I think both Gaming and Entertainment and Health & Wellness, which is largely pharma is good. And I think we're happy with where we are there. It's the Tech & Shopping experience, which, again, I would bifurcate kind of the affiliate commerce from the nonaffiliate commerce. I think the nonappeal e-commerce, we feel pretty good about, it's the and the non-B2B, I should point out.

But it's the affiliate commerce piece that we're going to have to work through a couple of quarters of challenges before we get to kind of the other side of that.

[Operator Instructions]

Your next question is coming from Robert Coolbrith from Evercore ISI. Robert, your line is live. Please go ahead.

Can you speak more directly to both the traffic and the value at risk in Health & Wellness from search in general as well as some -- there's some concerns, I think, in the market around AI-based competition on the clinician side. So if you could maybe talk a little bit about that as well.

And then finally, just to go back to M&A as both a buyer and seller. Just given the level of AI-related uncertainty as well as the embedded call option AI licensing. Do you see that sort of freezing up the market? Or are you in potential counterparties able to sort of see through that, work through that?

Great questions, Rob. So with respect to the search dynamics within Health & Wellness, that's not an area that I'm really concerned. Much of the inventory within that segment is not surfaced. So we have our partnership, our hospital ad network, Mayo Clinic and Cleveland Clinic and hopefully soon, adding some more to that network, we do these custom condition centers, which really don't rely on search engine traffic. We have our direct-to-provider business, which is largely e-mail and other forms of physician engagement. So with respect to H&W, Health & Wellness, I'm not concerned about whatever the search dynamics are -- and so what I would say is that it's more of a pharma commercialization business where we work with pharma to commercialize their drugs and to drive patient, patient adherence as well as helping influence doctors' understandings of the prescription opportunities that are available to them.

I think with respect to your question on AI and M&A. Look, I think that deals can be done, and I understand your point, which is some folks may be holding out just given that there could be a potential windfall on the AI licensing front and so may not be willing to transact right now. And I think it's about -- look, that's certainly a question that's out there that until we really understand what the revenue framework and potential is around license content for LLM, you may have certain owners of content assets skittish about transacting. That's certainly out there. On the other hand, I think there are folks who just sit there and say, look, it's a difficult market. It might be time for them to concede or to capitulate or they find it difficult to sort of bridge where they are to where they want to go, and that will be an opportunity for us.

So look, I think it depends. I don't think there's 1 answer. That's certainly come up because people view it as free option on AI licensing revenues in the future, but we'll see. And look, I think more broadly, I do think that there aren't as many buyers position the way we are positioned in terms of balance sheet capabilities, skill set, platforms and, frankly, interest in these assets.

Got it. And just if we could go back to the growing AI footprint or the footprint of AI tools and clinician side, are you seeing any impact there or no real impact?

It's a good question. I mean I certainly believe that physicians like pretty much everyone else are using these AI tools in their day-to-day. And look, I think that obviously is something that will present, I imagine marketing opportunities, et cetera. And so look, yes, look, I think that any and all tools that attract physician attention or valuable tools. And so we think we have valuable news, information, continuing medical education. The advantage of continuing medical education is providers need to get their CME credits. So we feel pretty good about a physician engagement platform that is tied to the need to get CME credits.

Thank you. And there are no further questions in queue at this time. I would now like to hand the call back to Bret Richter for any closing remarks.

Thanks, Tom, and thanks, everyone, for joining us today. We appreciate your ongoing investment and time, and we look forward to speaking with you in the next couple of months and in our upcoming Q1 earnings call.

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

All right. Good morning, everybody. So I'm Stephen Ju with the UBS U.S. Internet team. Sitting to my left is Mr. Bret Richter, who serves as the CFO of Ziff Davis. So Bret, welcome to Scottsdale.

Yes. Thanks for having us.

Yes. Thanks for joining us. So I guess starting way at the top, for those who might not be as familiar with Ziff Davis, could you just start by giving us a quick overview of the company and provide us with the current sort of state of the union, if you will.

Sure. Well, first and foremost, we always welcome new interested parties to anyone out there who's just learning. Ziff Davis is a company with a long rich history. We could date our brand and our brand name back a century to the old Ziff Davis. Our company was started a couple of decades ago in a business that was primarily providing eFax services and a little over a dozen years ago, started to diversify the business by investing in Internet-based digital media and software and subscription data assets.

About 4 years ago, we spun off that legacy business, rebranded our business, Ziff Davis, and it was almost a rebirth at the end of 2021. Our business serves communities around the globe with digital media content, software and database services. We have structured our business into 5 divisions, which as of February of this year, and we'll talk more about it, are now 5 reportable segments. We have our tech and shopping business, which houses brands like PCMag, CNET, RetailMeNot, serving primarily consumer communities houses and facilitating e-commerce and partnering with brands to help market and sell their services.

We have a gaming and entertainment business, which has 2 parts, IGN Entertainment, which is one of the largest gaming, if not the largest gaming -- online digital gaming community in the world and Humble Bundle, which again facilitates commerce between providers of games, software, books to that overlapping entertainment, digital entertainment gaming community. We have Everyday Health, which is our health and wellness business.

Everyday Health serves the consumer marketplace, the professional and provider marketplace and the pregnancy and parenting marketplace, developing highly authoritative content, partnering with brands, primarily pharma to connect those communities. We have our connectivity business, which under the brands of Ookla and Ekahau serve the broadband community on a global basis. Subscription licensing data services primarily serving enterprises, governments, carriers and an increasingly broader set of participants in the broadband community. And then our cybersecurity and martech services, which, again, subscription and licensing business, serving marketing services communities, helping facilitate connectivity between brands and their customers and cybersecurity, both consumer privacy and small and medium enterprise cybersecurity services.

What's common throughout all of our businesses is not only are they digital Internet-based, often global, but we have a very strong economic and profit motive. We -- while we are passionate about the communities we serve and ensure that our products and services meet the needs of those communities, we do so in a way that we try and there's a little bit of feedback coming through the mic. Hopefully, that's not too bad on mine. We do it in a way to strive for profit, cash flow and profitable growth. That financial discipline, that financial model runs through almost everything we do, including our M&A program. So as a total growth company, not only do we seek to manage our various businesses and assets to achieve growth within their various spheres of influence, but we recycle our cash flow into an M&A program that's been used over the last dozen years to build this company.

Got it. All right. So I think as you built out this portfolio of assets, I think you've publicly announced or at least acknowledge that you're working with external advisers to evaluate ways to unlock value. So I think this includes a potential spin-off of some of the assets. And certainly, I would imagine that inbound interest has definitely picked up following the now, like what you articulated as the 5-segment disclosure. So from your seat as the CFO, what are the key things that you're trying to solve for?

It's a great question. I can make this overly simple and say essentially, what we're solving for is what we believe a proper reflection of the intrinsic value of our businesses in the public share price where, again, very, very conscious of the pressure the stock has been under over the last couple of years. We're well aware of some of the concerns and dynamics that might have resulted in that pressure. But in our estimation feeling, there's a gap between the intrinsic value of our businesses and the per share price.

One thing that we've done in the last several years to sort of react to that and view it as an opportunity is we've significantly increased the allocation of capital to our stock buyback program as opposed to our other opportunities for allocating capital. Capital allocation, again, is one of our kind of core philosophies and core principles. It starts with sort of a perspective that's only 4 things that we can do with our investable capital, which we generate through our free cash flow. And when we think about intrinsic value, one of the things that we anchor to and taking view of that is our ability to generate cash, and the company has consistently done that.

So if we're generating cash, we can reinvest that cash in our businesses, which we believe we do. And there are times where maybe we've pulled back on investment in order to achieve our -- one of our many goals of sort of maintaining margin, maintaining our adjusted EBITDA and maintaining our adjusted earnings and maintaining our cash flow in a period where we've seen some top line pressure. But we do believe that we ensure that our businesses get the OpEx and CapEx they need to pursue the opportunities that they believe they have within the communities they serve. We can continue to enhance our balance sheet. That's sort of Pillar 2 in capital allocation. And we believe we've done that. We have a significant amount of cash on our balance sheet. We have what we believe to be a very manageable leverage level. We've set a sort of guideline principle for the company of never having over 3x gross debt. We're nowhere near that. So Pillar 2 is our balance sheet.

Pillar 3 is return of capital to shareholders, whether it be our stock buyback principally historically, back prior to my participation in the company, the company paid a dividend. So again, this is a common theme the company has had in an extended period of time. And then Pillar 4, which we believe has been an extraordinary effective tool that we've used to build our businesses and establish the 5 divisions that I described before is M&A. And in the last couple of years, we've had a higher degree of capital allocation to our stock buyback program and our M&A program, and that reflects a lot of things, including just various dynamics in the M&A market at any given point in time. But the share price is still low. We believe there's intrinsic value. So our primary goal is to unlock that value.

Got you. Right. So there's an underlying sort of conglomerate discount, if you want to put it that way, for Ziff Davis here. So I guess -- and individually, each division should command a higher multiple versus the consolidated, right? So are there 1 or 2 segments that you feel like there's like the gap is just outrageous and intrinsic value versus what the public market's perception is. Is there anything you want to highlight as being particularly be just...

Well, I think the first thing I'd respond to in answering that question is we took a major step in February of this year of changing our public reporting, moving from 2 reportable segments to 5 reportable segments. Historically, our cyber and martech business, given the nature of its subscription and licensing revenue and had been a reportable segment, and you could look back several years going really to 2022 post the spin-off of Consensus Cloud Solutions, which occurred in the fall of 2021. And again, just this predates my time, but an example of the company using financial mechanisms to unlock value.

We believe that spin-off unlocked a tremendous amount of value. At the time of the spin-off, Consensus was trading at almost $2 billion, and I don't believe that the broad community of observers of Ziff Davis had attributed that kind of value to Consensus Cloud Solutions at the time. But again, predates my participation in the company, but shows our historic approach. We look at various measures of how our stock may be valued keeping in mind that it's valued by the market. We don't trade the stock, others trade the stock, but you can look at implied multiples and whatnot. And when you look at the multiple, whether it be adjusted EBITDA, whether you look at cash flow, you can -- it's relatively low. In fact, we think very, very low. Within that, there's probably a blend because we have certain businesses that have been performing well, if not very well. And core principles, multiples, amongst other things, are a function of growth.

So if you look at certain of our businesses like health and wellness and connectivity that have been exhibiting growth, particularly strong growth this year, you might imagine that those are implied higher multiples than some of our other businesses. So your question is a little hard to answer in that we don't know what multiple the public market is attributing to each of our businesses, whether they be of our 5 divisions or businesses within our 5 divisions. But what we were hoping was that by moving to 5 reportable segments and that by providing further insight into the financial characteristics of each of our divisions, both their historical financial performance, revenue growth, their margins, their mix of revenue. So each of our businesses, you can now see the split between advertising and performance marketing, subscription and licensing and to a small degree of other revenue in each understand the financial characteristics of each.

Maybe certain of our outside constituents would start to take a view on a sum of the parts basis or a similar basis of what each of those parts might be worth. And to the extent a conglomerate discount exists, and we're certainly aware of the concept, whether that discount is too extreme, whether that discount is fair. And we had some of that. And over the course of the last 3 quarters or so, new conversations, new interest from various public market participants. But what also happened was we saw an influx of connections to us by private market participants questioning whether or not we would consider transacting on any of the assets. And our view is that to the extent a large enough gap exists, it's something that we should consider. Frankly, as fiduciaries, it's something we have to consider. So we wanted to do that in a formal way. We engaged advisers to respond to some specific interest, and we'll see where the path takes us.

Got you. Touched on health and wellness, right? That's now putting together double-digit revenue growth with high 30s EBITDA margins. So what does this business look like in a steady state? I imagine most of that is probably the Everyday Health asset that you just called out earlier.

It's a big -- it's certainly a part of it. I think maybe just widen the lens on every -- we -- the business overall is branded Everyday Health, and there's also a business within it called Everyday Health, which serves the consumer health community. Everyday Health is a wonderful position in the marketplace because it has the ability to connect primarily pharma advertisers with the communities they want to connect to. We connect through various of our underlying brands and services to consumer health, professional health and the pregnancy and parenting community.

Our ability to generate impressions between the communities that are served by our digital properties and pharma advertisers as well as other advertisers, for instance, in our pregnancy and parenting community, there's a lot of baby strollers. So it is not -- but pharma health is a big part of it. So pharma commercialization is core to that community. We believe Everyday Health has a very special place in that ecosystem by being able to connect in so many -- so many different communities within health in so many different ways.

Within Everyday Health, consumer health under our Everyday Health brand, but also we have applications that allow consumers to engage in their own health journeys and manage their own health outcomes, which is a rapidly accelerating and emerging aspect of the health community. Lose It! is a great example of that. And Lose It! is a digital subscription weight loss application that helps consumers manage their health journey. And again, subscription revenue versus revenue that relies on payments from the brands that we serve. Within our professional services, we reach providers. We reach providers in many ways. We reach providers with information that is specific research authoritative and relevant to the journey they're on, the information they seek.

We provide services to those providers through our prime business, we educate them with continuing medical education. We actually connect providers to potential employers and hospitals in the communities they serve. And then our pregnancy and parenting community has 2 of the most recognizable brands in pregnancy, what to expect in babyacenter.com. And as anyone's been on that journey, it's seeking information with authoritative content is critical as you try to manage that aspect of life. So we believe that the -- what our Everyday Health Group is well positioned to continue to capitalize on very important trends in the health community, pharma's connectivity with consumers, pharma's connectivity with providers, authoritative research information as consumers try to more actively engage with their providers, get better educated and manage their own journeys.

I guess authoritative, that is the key, right? So I assume the traffic and impressions and everything else that you're serving, given the revenue growth is going up and to the right, that has been sustained.

I mean you can see the numbers. I think we did one small -- one of the things that is also relevant across all of our businesses is diversification. I think one of the -- maybe -- it's always hard for me to get into a third-party observer's mind. But I think one of the aspects is Ziff Davis that is underappreciated is the diversity by the way that we make revenue. Of course, it creates a degree of complexity and complexity can create a little bit of a barrier in terms of understanding certain of the dynamics of the business. But whether it be health, whether it be gaming, our ability to reach and generate impressions in so many different ways, both on our owned and owned properties through our partner sites to the key partners that our health and wellness business works with or the Mayo Clinic and the Cleveland Clinic, we can reach communities in so many different ways that it allows us to not rely on any single source or revenue stream to any significant degree.

And I think you mentioned IGN and CNET and these other sites. I mean, they were always the most authoritative sites for whether it was gaming content or consumer electronics, review content, et cetera.

It is -- it's another core principle of the company to the extent we can to have those leading brands in any of the spaces that we operate in. It was one of the principal drivers of our acquisition of CNET in 2024 and the ability for us to bring together our PC Mac community, not to mention our Mashable community, our Lifehacker community that serves that consumer technology space with CNET. We rebranded each of those, the CNET group on a go-to-market basis. And again, we just lapped the 1-year anniversary of that acquisition in September. We -- being a leading brand in the space, we think, ultimately is a winning factor.

Yes. Got you. Switching gears a little bit to the cybersecurity and the martech vertical segment. That returned to revenue growth in the third quarter. So what are the things that need to go right over the next 12 to 18 months for that segment to consistently deliver what we hope will be positive growth and margin expansion?

Sure. It's a great question. I think importantly, there's a number of different businesses and brands under cybersecurity and martech. And I joined the company in 2021, and it was the source of some of our revenue decline and organic pressure, partly because often when we do an acquisition, we take a view of shrink to grow, where we look at a -- we acquire a business that maybe has not been performing to an optimal level. Maybe it has not been run with that balance of growth and profit motive that we believe is ingrained in our DNA. Maybe there are certain revenue streams within those businesses that should be sunset and that's our shrink to grow and whatnot and maybe there's a change in the go-to-market overall.

And we saw some of that in the cybersecurity and martech business. And since it's been a reportable segment going all the way back to 2021, you can see the improvement in the lower rate of decline that, that segment reported and in fact, returned to growth in the last quarter, thank you for pointing that out. Two principal parts of cybersecurity and martech, there's cybersecurity. Our VIPRE business serves endpoint, e-mail, security awareness training, cybersecurity solutions to small and medium enterprises around the globe. That's a good business and has been performing incrementally well over this period of time. The other part of our cybersecurity business is our consumer privacy business or our VPN business.

That business has been performing strongly and much more strongly in 2025 than it had been going back into '21 and '22. A bunch of different dynamics in that business and how we connect to potential customers of our VPN services, whether it be the affiliate marketplace, whether we're selling through the App Store and how do we generate subscriptions. And I think it's an important point because one of the overlying -- and my guess is we're going to get to it, one of the overlying questions for Ziff Davis is search and traffic and whatnot. This is a subscription and licensing revenue business. We make that distinction in almost revenue recognition, subscription and revenue recognized over time.

License is often revenue recognized point in time, and we have a different mix. But this is not an advertising revenue business. And in fact, 40-plus percent of our overall revenue is subscription and advertising. And I think that's an important aspect and maybe a misunderstood or underappreciated aspect of Ziff Davis. Our martech businesses help facilitate connectivity between brands and the communities that they're marketing to. We do that through e-mail. We do that through SEO, primarily and various products and services under that. It's been a mix of different performances of different businesses and brands within that segment over time. In 2024, e-mail was probably our strongest performer, helping brands get into e-mail boxes. This year, there's a little bit of change in some of the algorithms and getting into consumer mailbox, and we've seen some pressure in that business just as VPN has been performing better. But overall, with a very small but a little bit of smattering of M&A, we've been able to bring that business back to growth. And all along, and again, this goes back to core principles. I think the first question you asked me, margin, profit, cash flow.

Yes. Got you. you did bring up the subscription part of it, and that business is now expected to deliver, I guess, low to mid-single-digit growth this year. So can you talk about the drivers of that growth from a business perspective?

Yes. It's bringing -- it's that balance of allowing the brands that are performing well to get the capital they need to grow and expand and managing some of the challenges the other brands had. Also within subscription and marketing, we have a couple of brands that were almost in managed decline. And it's a really small part of our business. But to the extent we're not investing in these businesses, we're running them for cash flow and whatnot. There's no secret sauce. To the extent like an e-mail, there's an impact in a 12-month period, maybe we lap it, maybe we sort of tweak our business to reposition ourselves in the marketplace to overcome it. But I think the overall mix of revenue in that business has reached more of a steady state versus a high single-digit decline to a mid-single-digit decline to a low single-digit decline. And it's really just serving those communities.

Okay. Is there any sort of halo benefits that we might want to talk about because you have all of these consumer brands, you have inherent traffic because people are coming to look at that content. So is there -- have you -- I assume that you've optimized the different properties so that you are putting traffic through to your subscription properties and where there's a transaction to be had?

So it's certainly -- it's -- having been doing this for decades, I'm not sure I've ever seen any business fully optimized. There's always opportunity to be better. And again, that's incumbent upon us as leaders to pursue those. To the extent that our businesses can work together, they do. We communicate as a leadership team, we look for opportunities. Macro changes that affect multiple businesses are addressed on a company-wide basis. But often, we -- and in fact, we're set up this way in a highly decentralized way is our brands, our businesses are set up to pursue their opportunities sort of independently of sort of a corporate mandate. And we think that decentralizing principle is powerful and frankly, overall important to our overall enterprise.

To that end, then it goes back maybe just connecting to one of your other questions. Each of our 5 divisions as a president. Each of our 5 divisions has finance leadership. Each of our 5 divisions has technologists. They are set up to operate independently. To the extent, though, and there's a lot of changes with AI, and there's a lot of changes in the search ecosystem, macro patterns we address globally.

Yes. So let's talk about how traffic patterns are switching around in the Internet. I think probably every 5 years, decade, we have to think about traffic switch and consumers choosing to go to different places to start their journey, right? So we've gone from Google to search, and now we have to think about another mode with ChatGPT and the LLM. So I think on the third quarter earnings call, you talked about, I think, 35% of the revenue is web traffic dependent and roughly half of that is coming from search. So I don't know that's 17%, 18% of total revenue. So should we expect that percentage to continue to come down over time? It seems like it should, but...

It's a hard question to answer for 2 reasons. One, I think there are multiple dynamics that underlie that. The first is we start with the business, as you noted, is not entirely search dependent. We are not a programmatic advertising business. We are not just monetizing impressions in the programmatic marketplace. In fact, 40-plus percent of our business is subscription and licensing, another handful of percentage is what we call other revenue, which are sort of discrete transactions, including in the case of our connectivity business, some hardware sales.

And within our 50-plus percent of our revenue, what we call advertising and performance marketing is very much a mix in including -- we have a gift card business. We have affiliate commerce businesses. We generate revenue direct from brands and providers by connecting them to members of the health provider community through continuing medical education. And you appropriately cite the figures that we cited to try to scale the relationship of Ziff Davis' overall revenue to what has become an important but emerging dialogue in the digital media, the digital content marketplace.

Ultimately, what that percentage is will depend not only on the performance of the portions of our business that are not exposed to that as well as the proportions of our business that, as you noted, do relate to search, but also our M&A program and how that business changes over time. connectivity of various questions that we've said today, to the extent we execute a transaction on one of our business, that percentage can change significantly depending on one way or another, depending on which business it is. So that's hard to measure. I think the important message from our point of by no means do we dismiss the unknown that's associated with changes in the search marketplace. And by the way, the search marketplace, as you rightfully point out, has been changing for decades. And in fact, one of the things that we deal with is not necessarily the AI portion, but just the constant change in the Google search algorithm, which seems to change much more rapidly in our current period of time than it has been historically, which can disrupt businesses positively or negatively at every given update.

So what we want to emphasize is we believe this is the size of that exposure relative to our enterprise today. And it goes back to the extent that risk is manifest in the view of a multiple, what is the appropriate balance of that risk relative to our overall enterprise? And is that overall multiple the right multiple considering all the other factors.

Got it. You touched on this a little bit earlier in terms of capital allocation and the discipline there. You've been very active in the buybacks. You repurchased about 3.6 million shares year-to-date. And I think you've deployed about 80% of -- 85% of your free cash flow. Y-to-date Year-to-date. Yes. So you also closed 7 acquisitions.

Yes we did.

So pretty busy. So how are you weighing the incremental dollars, whether that goes to buybacks versus M&A? And I guess, heading into next year. And I guess in this environment, are you seeing an increased amount of assets, I guess, coming to market and I guess, anticipating getting more busy...

In the 4-plus years -- almost 4 years, I didn't quite crossover yet that I've been with Ziff Davis, there's never been sort of a dearth of opportunity. We use the metaphor of the funnel as it relates to M&A. The top of the funnel always seems to be full. The challenge in any M&A transaction is can you get through the bottom of the funnel. And while there's a lot of details that go into there, ultimately, it's just price between buyer and seller. And we're disciplined buyers.

There's no more important success factor in M&A than price. And you could pay relatively high prices for relatively great assets. You could play lower prices for good assets. And we do both because really what we're trying to do is enhance the ability of our existing businesses to serve the communities that they're seeking to serve. We did 7 acquisitions this year. None of them are particularly large. Some of them are actually quite small, and therefore, we've actually deployed less than $70 million of capital into M&A in 2025 versus the more than $100 million of capital that we deployed for stock buybacks. It's a balance. It goes back to the first question or the second question, I think you asked me. What are we trying to achieve, increase in per share value.

Got it. All right. So I think we are almost out of time, but one last question here. We're sitting here 12 months from now, December of '26, and we're sitting back here at the conference. So what do you think we're going to be talking about in terms of what you've been able to accomplish over the trailing 12 months?

I wish I knew. But what I do know is what we are out seeking to do. What we're seeking to do is create value for our shareholders through a disciplined approach to serving the important communities we serve. To the extent that we can achieve that through transactional activity, whether it be deploying our own capital or highlighting value of certain of our assets, we will do that. But ultimately, we create value by creating value within our businesses, and that's what we're seeking to do, improve performance and allow our businesses to achieve their respective goals.

Got you. We'll leave it there. Bret, thank you very much for joining us.

Thank you for having me.

All right.

Good day, ladies and gentlemen, and welcome to the Ziff Davis Third Quarter 2025 Earnings Conference Call. My name is Tom, and I will be the operator assisting you today. [Operator Instructions]

On this call will be Vivek Shah, CEO of Ziff Davis; and Bret Richter, Chief Financial Officer of Ziff Davis.

I will now turn the call over to Bret Richter, Chief Financial Officer of Ziff Davis. Thank you. You may begin.

Thank you. Good morning, everyone, and welcome to the Ziff Davis investor conference call for Q3 2025. As the operator mentioned, I am Bret Richter, Chief Financial Officer of Ziff Davis, and I'm joined by our Chief Executive Officer, Vivek Shah.

A presentation is available for today's call. A copy of this presentation as well as our earnings release is available on our website www.ziffdavis.com. In addition, you can access the webcast from this site. When you launch the webcast, there is a button on the viewer on the right-hand side, which will allow you to expand the slides. [Operator Instructions]

Before we begin our prepared remarks, allow me to read the safe harbor language. As you know, this call and the webcast will include forward-looking statements. Such statements may involve risks and uncertainties that could cause actual results to differ materially from the anticipated results. Some of those risks and uncertainties include, but are not limited to, the risk factors that we have disclosed in our SEC filings, including our 10-K filings, recent 10-Q filings, various proxy statements and 8-K filings as well as additional risks and uncertainties that we have included as part of the slide show for the webcast. We refer you to discussions in those documents regarding safe harbor language as well as forward-looking statements.

In addition, following our business outlook slides are our supplemental materials, including reconciliation statements for non-GAAP measures to their nearest GAAP equivalent.

Now let me turn the call over to Vivek for his remarks.

Thank you, Bret, and good morning, everyone. In our third quarter earnings release, we announced that Ziff Davis has engaged outside advisers to help us evaluate potential opportunities to unlock value for our shareholders. I'd like to provide some additional context to this disclosure.

At the end of fiscal year 2024, we significantly enhanced our segment-level reporting, going from 2 to 5 reportable segments. One of our goals with this change was to provide investors with a more comprehensive understanding of the financial characteristics of each of our divisions. And we believe that this reporting has resulted in greater insight into the performance and intrinsic value of these businesses.

We've been encouraged by the reaction to this reporting change, including the engagement from public market investors and analysts, some of whom have used the enhanced disclosures to adopt a "sum of the parts" approach to the valuation of Ziff Davis. We applaud those efforts because we believe they do reveal a meaningful discount in our current market cap relative to the intrinsic value of the company.

At the same time, we have also received interest from both strategic and private equity investors in certain of our businesses, presumably doing their own analysis of our various components. In order to properly evaluate this interest, we have engaged outside advisers to assist us in assessing how certain potential transactions could unlock greater shareholder value. While no final decisions have been made to date, our focus remains on maximizing value for all shareholders. There is no assurance that this evaluation will result in any transaction and we are very willing to continue to operate with the current business structure, which is profitable, growing and generates strong free cash flow.

It's worth noting that proactively evaluating and acting on opportunities to create value for shareholders is embedded in our company's culture and history. You'll recall that in 2021, we undertook a similar process that resulted in the spinoff of our Consensus business as an independent public company, demonstrating our willingness to take action when it serves our shareholders' interests and unlocking significant stakeholder value at that time. In that transaction, Consensus' post spinoff enterprise value was close to $2 billion. This was a very positive outcome for shareholders and employees of both companies. If and when there are material developments related to these initiatives, we look forward to providing updates then. And we will, of course, continue to be intently focused on executing against our operating plans.

Turning now to our performance in the third quarter. We grew revenues nearly 3%, marking a fifth consecutive quarter of revenue growth. While our adjusted EBITDA fell slightly year-over-year, we grew adjusted diluted EPS by 7% as we increased our share buybacks to capitalize on the current valuation disconnect in the price of Ziff Davis stock. Three of our 5 reportable segments grew revenues in Q3 and including a return to growth for our Cybersecurity & Martech segment.

So let me share some observations about each of our 5 segments. Tech & Shopping revenue dropped 2% in Q3 with adjusted EBITDA down 12%. This was primarily driven by the continued wind-down of our game publishing activities, which had a negative year-over-year revenue swing of $6.9 million. As you'll recall, we previously announced that we are no longer investing in new game titles, but we have a slate of pre-existing projects which will launch over the next 4 quarters.

Excluding game publishing, the Tech & Shopping segment grew in both revenues and adjusted EBITDA, led by CNET, which delivered strong year-over-year growth in licensing driven by new awards, expanded video capabilities and sponsorships and the continued rollout of our Best Buy partnership that began implementation in Q3 of 2024.

Gaming & Entertainment revenues were about 4% lower year-over-year, with adjusted EBITDA growth of nearly 3%. Gaming & Entertainment's revenues can be lumpy due to the timing of title releases. Year-to-date revenues are up approximately 2%, and we are on track for revenue growth in the seasonally important fourth quarter.

Q3 was [ Humble bundle's ] best quarter of the year and was the second highest revenue quarter for the business in the last 5 years. Humble Bundle's subscription revenues were up 5% year-over-year. Events continue to be a large focus for IGN entertainment for audiences and advertisers alike. IGN was back at San Diego Comicon in July and was once again the studio partner for Gamescom, the world's biggest gaming show held in Germany every August.

Health & Wellness' growth accelerated in Q3 with 13% year-over-year revenue growth and 18% year-over-year adjusted EBITDA growth, both representing high watermarks for the division in the third quarter. The growth was balanced across subscription and display and performance marketing revenue. We continue to deliver positive results with our pharma commercialization programs while supporting health-seeking consumers with our digital health and wellness solutions like our [ Lucid app ], which saw strong subscription growth this quarter.

Since we acquired Everyday Health, the division has evolved into a multifaceted solutions provider to the pharma commercialization, digital health and wellness and provider solutions markets. Participation across these verticals is particularly strategic in a world where the line between traditional health care and consumer-driven self-care continues to blur. Our ability to deliver positive, tangible results for pharma with both patients and providers continues to place us in a strong competitive position.

The Connectivity division delivered 2% year-over-year revenue growth as several deals shifted into the fourth quarter. Year-to-date, revenues at Connectivity are up 7%, and we are confident that revenue growth will accelerate in Q4, not just from timing benefits, but underlying strength in the pipeline and the introduction of new products.

Continuing our efforts to leverage our platform, brand and distribution to launch new offerings, the first new product is Speedtest Certified, which launched in September and provides a highly localized Wi-Fi certification program to target enterprise verticals under the Speedtest brand. Speedtest Certified is off to a promising start with strong global demand, including the certification of our first customer in October.

The second new product, which we are planning to launch in Q4, leverages Ekahau's core capabilities and is designed for rapid network validation, diagnostics, troubleshooting and continuous network connectivity testing. Our initial target customers are Internet service provider technicians and IT organizations, from which we have already received very promising expressions of interest.

Cybersecurity & Martech revenue grew 2% in Q3, consistent with our forecast this segment would return to growth in the quarter. Growth was driven by strong performance in cybersecurity, in particular from consumer VPN and consumer cloud backup. I highlighted the momentum in VPN on our Q2 call and it's great to see the turnaround in this business.

In Martech, we completed the small but exciting acquisition of Symantec Labs, a performance-based customer acquisition platform focused on the SaaS vertical. Symantec is a great complement to the customer generation capabilities we have elsewhere in our Martech portfolio as well as in our Tech & Shopping segment.

Across the company, we are leveraging AI to enhance our products and improve operational efficiency. As mentioned on the last call, we developed an AI platform to refine how we serve our advertisers. This platform creates precise audience segments powered by billions of real-time signals from across our portfolio, translating this proprietary data into what we call moment-of-influence solutions.

This quarter, we officially launched 2 commercial applications of this proprietary platform. In Health & Wellness, we launched Halo, which activates our deep first-party data to identify and target high-intent audiences, maximizing campaign ROI. It is operational and the early client response has been strong.

In Gaming & Entertainment, we introduced [ IMAGIN ], a first-of-its-kind cognitive AI platform that combines cultural intelligence with predictive audience modeling to help brands understand forecast and reach entertainment consumers in real time. We're currently in private beta with select strategic partners, with a full commercial rollout planned for early 2026, aligning with IGN's 30th anniversary.

We are also deploying AI to drive efficiency. In our Shopping business, for example, 80% of all users who submitted coupon codes are now processed automatically with AI, one of many workflow optimizations being implemented company-wide.

On capital allocation, we are in a strong position with substantial cash to continue buying back stock at attractive levels and significant leverage capability. Even as we explore potential opportunities to unlock the intrinsic value in our businesses, which we believe is not appropriately reflected in our per share value, we are still committed to an acquisition program that generates attractive cash-on-cash returns for our shareholders.

This is a consistent strategy for us. Following the Consensus spinoff in late 2021, we closed 6 M&A transactions in fiscal 2022.

And with that, let me hand the call back to Bret.

Thank you, Vivek. Let's discuss our financial results. Our earnings release reflects both our GAAP and adjusted non-GAAP financial results for Q3 2025. My commentary will primarily relate to our Q3 2025 adjusted financial results and the comparison to prior periods. Please see Slide 4 for the summary of our financial results.

Q3 2025 revenues were $363.7 million, as compared with revenues of $353.6 million for the prior year period, reflecting growth of nearly 3%. Q3 2025 adjusted EBITDA was $124.1 million, as compared with $124.7 million for the prior year period, reflecting a decline of less than 1%. Our overall adjusted EBITDA margin was 34.1% in Q3 2025. We reported third quarter adjusted diluted EPS of $1.76, up from $1.64 in Q3 2024, reflecting growth of more than 7%. This increase is due in part to our share repurchases, which reduced third quarter 2025 adjusted weighted average fully diluted shares by nearly 3.3 million shares or 7.5% as compared with the prior period. Importantly, year-to-date, we have delivered growth in revenues, adjusted EBITDA and adjusted diluted EPS as well as a significant amount of free cash flow.

Slide 5 reflects performance summaries for our 2 primary sources of revenue: advertising and performance marketing and subscription and licensing. Both of these revenue sources grew year-over-year in the third quarter of 2025. Q3 2025 advertising and performance marketing grew 5.9% as compared with the prior year period, while subscription and licensing revenues grew by 2%. Q3 2025 other revenues declined by $4.3 million year-over-year, reflecting the significant decline in revenues from our games publishing business, which more than offset growth from other products and services.

Slide 6 through 10 reflect the Q3 financial results of each of our reportable segments. As Vivek noted, 3 of our 5 segments grew revenue in Q3 2025.

With regard to adjusted EBITDA, while there are numerous factors that impact margins in each quarter at each business, I want to highlight a few significant items that impacted Q3 2025 adjusted EBITDA at Tech & Shopping, Connectivity and Cybersecurity & Martech. As we noted, the year-over-year performance of Tech & Shopping was negatively impacted by the performance of our games publishing business, which is in the process of being wound down. We report this revenue net of the amortization of our game publishing investments. And during the last 2 quarters, we reported negative net revenue for this business as this amortization exceeded revenue during the period. This quarter, we reported nearly $7 million less net revenue from publishing than we did during the third quarter of 2024, and this reduction flows through at a very high contribution margin to adjusted EBITDA. In the absence of this impact in Q3, Tech & Shopping would have had positive adjusted EBITDA growth for the quarter.

Connectivity's Q3 2025 adjusted EBITDA margin was impacted by the timing of the contracts that Vivek highlighted in his remarks. However, it also reflects the investment we are making in Connectivity to support its anticipated growth. As Vivek mentioned, Connectivity has already launched 1 new exciting product to the market, with another product launch planned for Q4. Q3 2025 reflects our investments in product development, cloud services and sales expenses to support these new products ahead of revenue generation from them. Overall, we are excited about the prospects of these new products as we begin to head into next year.

Finally, Cybersecurity & Martech adjusted EBITDA was primarily negatively impacted by the timing of certain expenses. In Q2 2025, Cyber & Martech delivered more than 5% year-over-year adjusted EBITDA growth despite a modest decline in revenues. This quarter, despite an increase in revenues compared with the prior year period, Cyber & Martech's adjusted EBITDA declined by approximately $500,000, primarily as a result of these timing issues.

Please refer to Slide 11 to review our balance sheet. As of the end of the third quarter, we had $503.4 million of cash equivalents and $119.6 million of long-term investments. We also have significant leverage capacity on both the gross and net leverage basis. As of September 30, 2025, gross leverage was 1.7x trailing 12 months adjusted EBITDA, and our net leverage was 0.7x and 0.5x, including the value of our financial investments.

During the third quarter, we closed 2 small acquisitions to expand the capabilities of our Connectivity and Cybersecurity & Martech businesses. In the first 9 months of 2025, we closed a total of 7 acquisitions across our businesses, and we invested a total of $67.3 million net of cash received to support our M&A program. We anticipate we will continue to be an active and disciplined acquirer as opportunities arise to add capabilities to our businesses in an accretive manner.

Since our second quarter earnings call, we've repurchased 1.5 million shares of our common stock, with certain of these repurchases occurring during the month of October. Through the end of the third quarter of 2025, we repurchased 3 million shares, deploying $109 million or close to 85% of our year-to-date free cash flow. Overall, through today's date, we repurchased more than 3.6 million shares since the start of 2025.

We have nearly 2.75 million shares remaining under our stock repurchase authorization, and we continue to believe that the current trading level of our stock does not reflect the intrinsic value of our underlying businesses. Following this earnings call, we plan to utilize a 10b5-1 plan to continue to repurchase our shares.

Turning to Slide 13. We are reaffirming our fiscal year 2025 guidance range. As noted on prior calls, this is a broad range, which we set in February of 2025. And we currently anticipate our key fiscal year 2025 financial performance metrics of revenues, adjusted EBITDA and adjusted diluted EPS to fall within this range.

As we have discussed today, the consolidated financial performance momentum that we experienced in the second quarter of 2025 did not broadly carry forward to our third quarter results. And while a number of our businesses continue to show strength, we currently anticipate fiscal year 2025 total revenues and adjusted diluted EPS to be within the lower half of our guidance range, with adjusted EBITDA expected to be closer to the lower end of our guidance range. Please note that the fourth quarter is typically our seasonally largest revenue quarter.

Slide 20 includes a reconciliation of free cash flow. Q3 2025 free cash flow was $108.2 million, 35% higher than the prior year period. As of the end of Q3 2025, trailing 12 months free cash flow was $261.2 million. We believe that our ability to generate significant free cash flow is a clear indication of the intrinsic value of our businesses and highlights the disconnect we see in our share price.

Overall, through the third quarter of 2025, we have delivered year-to-date growth in revenue, adjusted EBITDA and adjusted diluted EPS, as well as significant free cash flow. Based on our current expectations, we have maintained our expectation of delivering fiscal year 2025 results within our guidance range. And we plan to continue to dedicate our investable resources to our active stock repurchase program while pursuing attractive M&A opportunities.

And as Vivek noted earlier, we remain committed to identifying and pursuing all opportunities that we believe offers strong prospects to enhance shareholder value, and we have taken tangible proactive steps to pursue certain of these opportunities. Although there is no assurance that the evaluation will result in any transactions, we are excited about the potential outcomes that may result from these efforts.

With that, I will now ask the operator to rejoin us to host our Q&A.

[Operator Instructions] And your first question this morning is coming from Robert Coolbrith from Evercore ISI.

Congratulations on the results. I know you have some opinions about where the valuation disconnects versus intrinsic value may be most acute. I wanted to ask if you'd be willing to share any thoughts there.

And then secondly, I'd imagine you've had some inbound interest from time to time in the past. Is there something unique about this moment that makes this the right time to entertain that interest in a more significant way. Is the volume of interest where you think you could drive some competitive auction dynamics? Or have you gone some of these businesses to a place where you think an exit now makes more sense?

So Rob, thanks for the questions. And I should also thank you, I know in your last note after our last call, you did do a "sum of the parts" analysis, which is what we're looking for. And I think to answer your questions, I do think things changed at the beginning of this year when we, for the first time, broke out the company into 5 reportable segments, which gave the entire marketplace a real view into the different businesses and the different drivers, the different growth characteristics, margin profiles, et cetera.

And so look, up until then, I think for a lot of people, they were just trying to feel around and estimate. We did that, as I said, with the public market in mind with our current investors and prospective investors and with analysts in mind. But what it also did was just attract a lot of attention from strategics and sponsors. And so look, from our point of view, that I would say that that was different than maybe in the past. And so the decision to engage advisers at this point was really in response to the level of inbound interest.

But I would also say that we're at a point where the disconnect between the current value of the company and we believe the intrinsic value of the company, the true value of the company in our own minds, is probably at the widest it's ever been.

And so with respect to your question on specific businesses, look, we go into this with an open mind, with a goal of unlocking the maximum amount of value. And what I would say is that we believe every one of our divisions should command a multiple, each of them individually, higher than what is the current Ziff Davis multiple. So in my mind, this value disconnect isn't just in a couple of places, it really is across the board.

Your next question is coming from Cory Carpenter from JPMorgan.

I had a follow-up to the strategic review and then one on AI overview, if I could. Just, Vivek, kind of continuing on that theme, maybe what all is on the table here? It sounds like you think there's a disconnect across all divisions, but are there any properties that maybe you think of as core or off-limits in terms of divesting? And would you consider perhaps the whole company, if that was something that you were seeing interest in?

And then on AI overview, some of the other publishers called out an impact this quarter on traffic just as that ramped up a little faster than expected. Curious to hear what you've seen there.

Thanks for the question, Cory. So starting with is anything off the table? No. We're, as I said, we're going in with an open mind. And so we don't have a specific preference.

As to respect -- with respect to your question about the whole company, look, the inquiries have been about specific businesses, and we do believe that exploring opportunities for select units is likely to be far more value accretive than considering a transaction for the entire company. That said, look, to the extent we receive credible interest in the broader company, we have an obligation to evaluate any opportunity that could unlock meaningful value for shareholders.

I think with respect to just the AI overviews and traffic, might be just worth sort of reiterating what I've said in the past in terms of our view that the company is pretty well positioned and insulated from fluctuations in search traffic. 35% of our total revenue is traffic, is web traffic dependent. Half of that coming from search, so roughly 17.5% revenue exposure.

And in AI overviews specifically, AI overviews currently appear in 29% of the queries that drive the lion's share of our traffic, which is actually a tick-down. So the prevalence of AI overviews with respect to the queries that are valuable to us is relatively stable.

What I will say -- so I don't -- I'm not thinking as much about AI overview prevalence. I'm thinking more about search volatility. There have been a number of algorithm changes and happening with pretty significant frequency that's creating a fair amount of sort of rank volatility, which is different than, I think, the AI overviews piece. So that's something we're watching. I think there's a lot of experimentation going on right now in the Google search experience. And so we're feeling some of those chops and some of those bumps.

And your next question this morning is coming from Shyam Patil from FIG.

I guess you, as you mentioned, you've prepared the market for this kind of announcement just with your segment level disclosures as well as some of your commentary in the past. I'm just curious, what do you prefer? And then maybe kind of a separate but related, like what do you think is more likely, selling pieces of the business, selling the whole company?

And then if it is just selling off certain pieces, what's your value kind of creation and unlocking kind of thesis or philosophy going forward? Would it be we buy businesses, we sell them, and then we use that cash to buy back stock or do further M&A? Just how do you just think about kind of those things kind of going forward as you kind of try to figure out what the business could look like over the next 3 to 5 years?

Shyam, all great questions. Look, I'll start with your question on preference. And my preference is whatever creates the most impactful and positive outcome for the per share price of Ziff Davis. Look, our shareholders have been patient. We feel an overwhelming obligation to really reward that patient. So I would say that the preference is a function of what's going to unlock the most value. And so it's hard to know or say what that's going to be until we get into this process and start to really understand market dynamics. And as you know, many of our businesses are performing really, really well. And so I think we feel optimistic about where that dialogue is going to go. .

In terms of the larger strategic question you're asking about the company, look, I think that what remains unchanged is that we are, I think, very good at identifying opportunities to use our digital transformation skill set to unlock value in businesses across the landscape. We've done it with digital publishing businesses, we've done it with data businesses, we've done it with software businesses. And that remains unchanged, right? And so I think we're going to continue, however this company evolves, to continue to be a programmatic and serial acquirer to unlock value.

Obviously, at this point, and we have done that generally with the view of being long-term holders of those assets. And the market is telling us right now that, hey, look, that may not be the right equation. And so that's where thinking about these options starts to make sense. Whether that's the continued model or we revert back to the hold model, I can't say. I think we just have to be flexible. I think we have to be thoughtful about all of this.

The other thing I'm going to say is that just we're going to consider all opportunities, so that could be sales, that could be investments, that could be spinoffs. So I think there are various transactional options that we're also going to consider in this process.

And Vivek, I might just add one short thought. I mean widening the lens. Our overall approach is to provide products and services to the communities we serve effectively and generate profits, cash flow and growth. And use that cash flow to ensure, one, we have a healthy balance sheet, and then allocate that capital to go back to that core philosophy of generating growing cash flows.

There'll be times, and there have been times, in our journey where we shift that capital allocation to -- from M&A to share buyback. And now we're adding one more leg to the equation, we're considering other opportunities to unlock value. So I don't think overall the approach changed or sets a new course for the company. We're just reacting to where we are in the broad market.

Your next question is coming from Ross Sandler from Barclays. .

Great. Vivek, I guess, a philosophical question. So if we're at the peak of system-wide Google referral traffic hit for the broader open web, the broader industry, and revenue impact or revenue headwind for companies like Ziff Davis or any other publisher might be peaking right now and potentially diminishing in a year or 2, why is right now the best time to put the for-sale sign up? Has the outlook for your display growth changed dramatically at all? I'm just curious as to why right now if we're in the peak of that impact.

And then, Bret, just a modeling question. I think you said we're going to land in the lower half for revenue, which I think implies like a low single-digit growth rate for advertising in the fourth quarter. Just curious what you're seeing thus far, and yes, the framing of that guide.

Yes. So Ross, it's an interesting question, and it actually reflects I think the dynamics that are existing in other businesses and not ours, right? So I think what I'm suggesting is this whole AI overview narrative really hasn't been relevant to our businesses. I mean take our Health & Wellness business for a moment. Close to 13% revenue growth in the quarter, year-to-date 12%, adjusted EBITDA up 18%. This business is doing exceedingly well. I mean it's sort of Exhibit A with respect to, I think, the nature of our businesses relative to maybe others in the marketplace.

So I would say it maybe a little bit differently, which is we're demonstrating that, notwithstanding what seemed like large industry headwinds, our businesses are doing exceedingly well. So that's one thing, and I think it's possibly why we have had folks reach out on various parts of the company. I will also point out that 2 of the segments have nothing to do with Google. And that is Connectivity and the Cybersecurity & Martech segments. And as you know, within Cybersecurity & Martech businesses, our various businesses. So look, I think that -- and then even within Tech & Shopping, RetailMeNot has a different kind of dynamic.

So I think maybe the issues relating to Google and search, while relevant to a few of our brands, may just not be that relevant to the rest. And so with that recognition in the marketplace, which is, wow, you know what, these businesses are built differently. They have different dynamics. The market -- the public market doesn't appreciate that, doesn't see that, we do, there's an opportunity here. And I think that's what's going on.

Ross, with regards to your second question. I think it's a fair observation too, and of course, we haven't provided that figure specifically, but looking at what might be implied for advertising in the fourth quarter, I think you said low single digit. I think first, I'd call out probably the most important factor is we'll be lapping the CNET acquisition in the fourth quarter. So we'll be comparing CNET year-over-year, while up to this point for the most part it's been a contributor.

And Vivek highlighted a couple of things, and I highlighted that certain of our businesses, the momentum in second quarter didn't quite carry through. And just emphasize what Vivek just said, in other businesses like Health & Wellness, it certainly did. But a little soft product launch in the marketplace as it relates to gaming and advertising, some search volatility, which impacts Tech & Shopping. I think it's a fair observation that we'd be looking for subscription growth to outpace advertising growth in the fourth quarter.

Your next question is coming from Rishi Jaluria from RBC.

Wonderful. Look, I appreciate all the color and increased transparency. Definitely do agree stock seems very undervalued here, and anything that can release shareholder value is great. But I want to turn now to maybe the M&A opportunities, because, Vivek, I mean, I think it's pretty clear from the way you're talking about the impact of AI search overviews and maybe AI search as a whole, that you seem to be -- your properties seem to be weathering this better than a lot of smaller properties.

And maybe I want to think, where is there an opportunity for you to get really aggressive as an acquirer or a consolidator with some of these properties out there that don't have that scale, that don't have the platform, don't have the diversity and, quite candidly, don't have the experience of, as you alluded to, weathering all the different search algorithm changes that have happened over the past decade, and maybe more than that? Because it really feels like given where sentiment is today and maybe we're at peak negativity on the AI search and media, but they really just give an opportunity for you to deploy a lot of capital right now and find some even smaller dislocated properties and really just kind of bring them in. Maybe walk us through how you're thinking about that, what sort of opportunities you see in the market?

Yes. No, listen, it's a great question. And I think all the following things can be true. We can be buyers of our shares. We can anticipate transactions to unlock value for our company. And then we can deploy capital in acquisitions. Because I agree with your view, which is 2 pieces, that we have built the platforms and approach that has worked and weathered the storm. Others may not have, and isn't that a buying opportunity? So for sure, we agree with that.

And I'll point out that, look, we've deployed close to $70 million for acquisitions thus far this year, and that program is not slowing down at all. But there's also no question that a big share of our capital deployment has been going to buybacks. It continues to stand out as, frankly, the best option for our capital. I mean we can buy this, what we believe, is an amazing company at almost unbelievable multiples. And so we've continued to do that. I think through just to date, it's 3.6 million shares. It's a significant part of our shares outstanding. And that's going to continue.

So look, I think that we're always balancing how we deploy our shareholders' capital in the right way against the realities of the per share price experience for our shareholders and looking to find that balance in this process and going forward.

Your next question is coming from Ygal Arounian from Citi.

Maybe the M&A question from a different angle, as you kind of go through this process, if you're more willing to think a little bit more about expanding into new verticals or areas of sort of higher growth?

And then on the AI side, maybe on licensing in particular, and I know there's a lot going on there. One of your competitors talked about sort of a marketplace model where, rather than an all-you-can-eat, sort of a pay-as-you-go. And it sounds like there's more interest for the LLMs to come to the table with the cloud fare blocking. Just wanted to get an update on how things are going there on your approach.

Yes, 2 great questions, Ygal. So just on the M&A front, look, we've always had a preference for buying leadership brands, CNET, leadership brand in tech; IGN, leadership brand in gaming; RetailMeNot leadership brand in shopping; Everyday Health, leadership brand in health, et cetera, et cetera.

So I think we're always looking for brands that have leadership because I will say that leadership brands can define their business models by demand and not supply. So much of the conversation is around supply because so much of the media business model has been around programmatic, which is a supply-driven business model, not a demand-driven business model. And so I think we're going to continue if we were to do things that look for businesses that enhance existing leadership or established leadership in new categories.

With respect to AI licensing, so we are active, very active with AI licensing discussions and encouraged by sort of this growing market consensus that compensating content owners is just a reality and a necessity. Now we're not going to sign any deal that doesn't provide fair value exchange for our content because this is -- setting the right financial precedent is important for a sustainable model. As you pointed out, the CDN layer with Cloudflare and others, we continue to block AI bots. And I think sources do matter. I think if you have a garbage in, you're going to have a garbage out problem in these models. And so I encourage everyone to always look at the sources when you look at the answers. I think you'll be surprised now to see what some of the sources are because as trusted sources of information block, like we and others are doing, it does create, I think, a quality problem.

I'll also point out, we've joined RSL, which is Real Simple Licensing, which is a standard that has been set, which essentially adds machine-readable licensing terms to our [ Robots.txt ] and also the RSL collective, which is kind of like a ASCAP or BMI, where there's sort of a negotiated collective, all to say that I do have a fair amount of optimism that the future will represent a pretty interesting new business model for content that receives compensation from various AI systems and models. So I am confident in that. I just think that in the early goings of this, you kind of want to set the precedents right.

Your next question is coming from Chris Kuntarich from UBS.

Vivek, you've called out that the cash that was generated from the Consensus transaction, that was put towards 6 transactions. You were kind of talking a previous response about going out and acquiring leadership brands. I guess in the event of a spinoff, should we be thinking about kind of the philosophical shift even further kind of on the margin towards targeting a different growth profile of business, maybe kind of expanding from leaders to emerging leaders and looking at something, again, with potentially higher growth profiles?

Yes. Look, it's a great question, and it's one we talk about a lot, which is in the end, how do we arrive at the returns profile. One of the challenges for us is that, look, I think in the end, or one of the realities for us is that we really focus on cash-on-cash returns, not necessarily multiple expansion to drive valuation, right? So we've always said, look, we're just going to be an EPS compounder in double digits. We're not at that target right now. I understand that, but that is our goal and expectation.

And so look, I think to do that, we really do price/earnings and cash flow, and it's sometimes hard with some things that are smaller and growth fees for that to be inside of our portfolio and get any credit. And it may not have the same margin profile and free cash flow characteristics. And so I think we focus a lot on free cash flow yield. And to the degree to which it fits our formula, I think we'll do it.

But we're not signaling here is a change in our formula. I do really think that what we have done an exceedingly good job of is finding investment opportunities where we can unlock a fair amount of cash flow out of those businesses. So I wouldn't want to abandon that in whatever we do. And then whatever this journey take -- wherever this journey takes us, I still think we're going to very much be committed to that approach.

There are no further questions in queue at this time. I would now like to hand the call back to Bret Richter for any closing remarks.

Thank you, Tom, and thank you, everybody, for joining us today. We appreciate your time and investment in the company. We look forward to speaking with you over the next couple of months and during our fourth quarter call.

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 participation.

Thanks, everyone, for joining. Ygal Arounian on the Citi Internet team. I'm really pleased to end off today with Ziff Davis CEO, Vivek Shah. We've got Dan Stone, President of Health and Wellness joining us today, too. So we'll dig into that segment a little bit more.

Thanks for being here with us today. We'll have some Q&A also at the end for anyone that wants to ask a question. So thank you for being here. It's great to be here.

I think usually, the way we do this is to kind of let you kind of kick off the story and walk through the Ziff Davis story. One thing that may be different this time, a couple of quarters ago, you resegmented the business, give some new segment breakouts. So maybe let's start from there, why you did that, what you want investors to know from that and helping understand the story and just kind of like the key drivers of the story for you.

Yes. No. So as you know, Ziff Davis is a serial acquirer of Digital Media, Internet and Software Businesses. And so like over the last 10 years, we've done a little over 70 acquisitions, but all of those acquisitions have been integrated into 1 of 5 operating divisions. So those 5 operating divisions each has a President. Dan Stone is the President of the Health & Wellness operating division, which is our biggest division. And so the idea here was really we wanted to give to the investment community insight into how we run the business and in terms of how the business is organized.

And what we're hoping is that investors will take some time to study each one of these businesses in some depth. They have differing growth characteristics and margin profiles and opportunities. They're in different market spaces. There may be different valuation dynamics. With the hope that what ultimately happens is as you assess each of these, you get to a really clear view of the intrinsic value of the company. And when we think about these 5, and I'll talk about each just for a second and just to level set, I'll start with the Health & Wellness segment. It's an HCIT platform that does pharma commercialization and Digital Health and Wellness. It's an exciting business. Dan will talk about it.

But I think from the outside, until you spend time looking into the dynamics, you may not get a full appreciation of what it actually does. We have our Connectivity division, which is anchored by the Ookla Group. And this is a data and analytics business that sits really at the center of the broadband world. So cellular networks, wireless networks really do rely on the solutions, the data and the tool set of the Ookla business. We have our Tech & Shopping business, which has CNET and RetailMeNot as the anchor brands. Think of that as really a driver of e-commerce and driving a ton of affiliate sales. We have our Cybersecurity & Martech business. And the Cybersecurity & Martech business is a collection of software businesses, high recurring revenue, great margin profile and particularly on the Cybersecurity side, some interesting emerging growth characteristics.

And then last but certainly not least is our Gaming & Entertainment business anchored by IGN, which I would argue is the leading brand in Gaming and Gaming is the fastest-growing segment of the Entertainment industry. So similarities, but a lot of differences. And so I think one would be rewarded spending time kind of looking at each of the pieces. And so -- the other thing that we're committed to doing, and that's why Dan is here with me today, and this is the first time we've done this, is to bring out the various executives that we have. They're a world-class team, introduce them to the investment community and have them tell more of the story.

We'll rotate one per year for the next 5 years. Is that the -- I don't know [indiscernible] that long. But okay. So you had a good 2Q, nice improvement in 2Q. Revenues were up 10%, adjusted EBITDA was up 12%. Really the strongest quarter you've had in a little while. Can you talk about the drivers of that and the outlook into the second half, kind of the sustainability of that improvement.

Yes. So we talked about the 5 segments. 4 of the 5 grew. That's important. The fifth that didn't grow was essentially flat, which is Cyber & Martech. So we need everything pointing in the right direction. So 4 out of 5 was good for us just given some of the more recent history. Two of the segments were sensational. Dan grew 16% in the quarter in Health and Wellness and Connectivity grew 14%. Now that's not new. These -- if you look back and we've disclosed a fair amount of historical financials at the segment level, you look at the multiyear CAGR, these are been good growers. This was a particularly exceptional quarter for both of them, but these have been consistent growers. So this hasn't been just a single quarter for them. But -- so they help drive a lot of the growth we saw in the quarter.

EBITDA was great. Everybody was up, 5% to 20-ish percent EBITDA growth across each one of the segments. So as you know, we have very much a bottom line orientation and a free cash flow orientation. So in many ways, I'm prouder of that dynamic organic growth, which, as you know, we are a total growth mindset. We look for growth organically from the businesses we own. We look for inorganic growth through acquisition. We look to create value and unlock value through those acquisitions. And so that combination, I think, came together really nicely. So it was a great quarter.

Okay. Good. And sustainability of that and the outlook for 2H?

Yes. So look, I think -- I mean, if you look at our guidance, we're looking at mid-single-digit growth in the second half. We feel comfortable with at the midpoint, which we feel comfortable with. Q4 will probably be a little bit better than Q3, seasonally the stronger quarter, as you know. So no, we feel good. And it's just that it is that combination of making sure that the businesses we own are performing. And then obviously, the businesses we've recently acquired are growing according to plan. And then if there are acquisitions that aren't within the guidance range, that would represent some upside.

Okay. Great. All right. Shifting to Gen AI, big topic. I think I asked you this probably a little too much, but I'll be forced to keep asking you as long as...

If everyone is asking you.

People are asking me about it. So Gen AI impact -- Gen AI search impact on traffic to publishers has been one of the largest topics we've heard from -- been hearing from investors and Wall Street and really the whole digital advertising space as well. And there's clearly been some impact there. You've given some frameworks for how that's impacted your properties. I'll let you speak to it, but you've got a good amount of non-search revenue organic and how that plays out. So what are you seeing? Maybe you start from kind of the market as a whole and the digital publishing ecosystem for Ziff Davis in particular? And then how do you think this evolves in the coming years?

Yes. So I mean, I think the first thing I would do is connect this question to the first one, which is when you hear what the company actually does, much of it doesn't apply to this question. So that's the thing that I just want to reinforce, which is a business, we have multiple monetization models. We have advertising for sure. We have performance marketing, we have subscriptions, we have licensing and that selling ads on web traffic, which is what everyone is talking about, isn't the majority of what our company does, right? And so as I've disclosed, 35% roughly of the company's revenue, I would put into the category of being web traffic dependent. So that's where this question may reside.

Within that, 40% of that traffic comes from search. And so there's absolutely -- so 15%. So there's absolutely no question that there's a bunch of things happening in search, lots of search engine result page, SERP, volatility, some owing to generative AI and AI overviews, others owing to just changes that Google is making in the search UX...

Which has been the case forever.

And the thing that I point out is what we're all talking about is zero-click search, right? So this is where a user enters a query and clicks on nothing. This is not new. 5 years ago, I was talking about this. No one was listening 5 years ago, 65% of search queries 5 years ago resulted in zero clicks. 10 years ago, that statistic was zero. So from 10 years ago to 5 years ago, that world changed. We changed ahead of it with it. And so now that, that 65% is 70%, that's not to me a big change. The big change already happened. And the way that you, I think, react to that change tells you a lot. For us, it was diversification of business. For us, it was the diversification of engagement. So app-based businesses, Ookla, BabyCenter, these are app we Lose It!.

These are app-based businesses, e-mail getting into inbox. We're very much an e-mail-oriented entity. Social, what are you doing on Facebook and what are you doing on Instagram and what are you doing on TikTok and what are you doing on Snap and how are you cultivating audiences and monetizing those events. I mean, there are a series of things that we've been doing well before zero-click search entered, I guess, the investment mindset. But -- so I don't view any of this as new. And the fact that we don't have the exposure that you're hearing about and being asked about, I think is really important because I think most don't see that. And I think a lot of the issues that we confront as a company, particularly from a valuation point of view, is the idea that all of those risks that they're seeing have an undue impact and area of concern for us.

So look, obviously, there's a lot of change. I think the ruling yesterday is interesting, the Google ruling. In many ways, I think that's favorable because in the end, what was at stake were basically the default engines of the 2 largest browsers in the world, Chrome and Safari. They're not browsers anymore. Those are search appliances. The first thing you do, none of you type in a URL. You type in a query into the OmniBook. And that in the hands of Google to me is better because Google, for all of the issues that publishers may express has always understood there needs to be a value exchange. We crawl this content, there needs to be a value exchange. And so they've always been focused on delivering traffic.

Yes, there's volatility. There have been changes. They will tell you the gross amount of traffic they send goes up every year, while the percentage of zero click goes up, which means there are more query volume.

Okay. You're leading me on a little bit. Just on the topic of LLM partnerships, there have been 2 approaches. One is to partner, one has been to not, and you guys have chosen the latter.

No, no, no. We would love to partner.

Okay. So go ahead. I'll leave it there and you -- what your approach has been...

Yes. No. I mean, look, obviously, we're engaged in a lawsuit against OpenAI relating to what we believe is violation of copyright, trademark dilution and violations of DMC Act. That is not though -- that wasn't without trying to at least come to some amicable resolution around compensation for our content. We believe that we should be compensated for all uses of our content, not just for what's referred to as RAG, but also for training. They do the same things. It's just different points in time, but there seems to be this bifurcation in the market of maybe we pay for RAG and we're not going to pay for training. And we believe fundamentally both need to be compensated for. So that's a difference of opinion, and we'll need the courts to ultimately weigh in.

But the second thing that we're doing, and we're certainly not alone, and I give Cloudflare a ton of credit. Cloudflare has developed a technology to allow at the CDN level, blocking of AI crawlers and bots. And so we've engaged those as well. And so those -- the garbage in, garbage out phenomenon that's well known in computer science, I think, applies here. I think if the LLMs are deprived of quality content, then that's also going to be, I think, a forcing function to have serious discussions around compensation. So make no mistake, I view this as a business opportunity. I just think it needs to be fair compensation.

Got it. Okay. Let's move on from that, Dan, let's talk a little bit more about Health & Wellness segment. Maybe kick things off with the broader overview of Everyday Health Group and its properties.

Sure. So Health & Wellness is the largest of the 5 segments. Our trade name is the Everyday Health Group. And our mission is to help improve health and clinical outcomes on the back of our trusted brands, content, data analytics, and we serve 2 audiences, health care professionals and wellness-seeking consumers. And as I talk more about our business model, that's really important to do both. And we're one of the few people who actually do both.

In terms of size, as you know, we just started reporting and our LTM revenue is about $380 million, about $142 million in EBITDA on that, which is -- so we generated in the 37% plus EBITDA margin range. Our CAGR since 2020 on the top line is about a little over 9% a year. And as Vivek mentioned last quarter, we were happy with the 16% growth for the quarter.

We look at the market in 3 verticals, 3 health care verticals. We have pharma commercialization, which is helping pharma bring drugs to market and sell their drugs. We have Digital Health and Wellness, which was generally dealing with consumers in conjunction with pharma or independent of that, getting healthy, which is a booming market. And the third is provider services, which is providing services directly to providers. The first 2, pharma commercialization and digital health and wellness are by far our 2 biggest, and that's what I'm going to spend the most time talking about. And then in terms of the way we're organized, we're organized by market platforms.

We have a professional market platform whose job it is to engage with health care professionals. There are 1 million doctors and there are 2.5 million more registered nurses and allied health. Then we have a consumer business, which is general consumer wellness. And then we separate out pregnancy and parenting. We kind of own that vertical with our what to expect in BabyCenter apps and other products in that vertical. So that's how we go to market.

Got it. Okay. And how is EHG positioned to win in the markets you compete in? So in particular, can you expand on pharma commercialization. Vivek, I think you expanded on that on your last earnings call, so it feels still more relevant.

So let's start with what the pain points are for our pharma clients. It's not gotten any cheaper to actually develop drugs yet the way to be successful is getting narrower and narrower. It's harder and harder. They go through all the clinical trials. They spend all that money, yet now they're dealing with formularies and insurance companies that they're either in or they're out. The windows of exclusivity are narrowing. So they have a pretty short window to engage the right customer. And that's what we're good at. So the model goes is we target, we engage and then pharma is very good at measuring. They use third parties to measure the degree of engagement with the right target audience.

And then we have deep analytical resources that basically creates a virtuous cycle where we refine our targeting based on the results of our clients and our ability to deliver them the audience they need. So this is -- cuts across a lot of different types of products. We have one in the -- it's called clinical study space for our pregnancy and parenting business. So we reach virtually 90% plus of pregnant women in the U.S. at any given time. It obviously -- it's an evergreen audience.

And we have a clinical studies business where we're working with contract research organizations, large publicly traded companies who are asked by pharma companies to identify pregnant women to do what are called pregnancy exposure registries to ensure that drugs post approval are safe for pregnant women, and they're doing this on an ongoing basis. So they came to us to help identify women in different trimesters for them to do these studies on. So we work with them. It's just an example of because we're so targeted and because we know how to engage our target audience, we're very valuable to them.

Another trend in the industry is for pharma companies to develop plans to reach -- to link their approach to health care professionals with consumers. So they have campaigns and try to see how it interacts because they need to educate the health care professionals to -- on their drug, on their treatment, and then they need to educate consumers to ask their doctors to use it. And we're one of the few companies that has both of those assets, very strong assets to reach both professionals and consumers. It's increasingly in demand and increasingly separates us.

And I'd like to expand on the comment that Vivek was talking about no click search and stuff. It's funny because as you're asking the question, it's something I don't think about because my job is to target an audience and engage them and then have it measured. And there are so many different ways we do that. If it's not one way, it's another, we're really more focused on the goal. So I read about it all the time, but it actually is not the way we think about it every day. The world changes in so many different ways that we just -- we evolve with it.

Okay. Got it. Maybe then just to kind of come back on that on how you're leveraging AI or Gen AI within your business, whether it's customer-facing or internal.

Sure. So I should also mention the second big part of our business is digital health and wellness. So we have the BabyCenter app, the -- What To Expect app, the pregnancy trackers. We had a very successful acquisition in 2022 of Lose It! which is a weight loss app, which, by the way, when the GLP-1 drugs that everyone reads about started to become popular, we were concerned that weight loss was [indiscernible]. But as it turns out for anyone who is familiar with GLP-1 drugs, it's really good at getting to stop eating. It's not really good at telling you what to eat when you do eat. So you can eat popcorn and it will make you full. So that business has never been stronger. And it's a perfect example of the use of AI.

So it used to be -- essentially, you're creating -- you're tracking all your calories based on what you eat. So if you have a plate of food, you go to a Mexican restaurant, you have beans and rice and tortilla, et cetera, it takes a long time to log all that and figure out how each of it weighs. AI, you take a picture of it and the AI converts it to a calorie count, which is incredible and which has really just juiced that product and just made it easier for everybody. That's a customer-facing example. Another customer-facing example of a product called Halo. We literally take RFPs from pharma companies and insert them into this AI bot. And then it looks at all the audience across all of Everyday Health and across Ziff Davis, develops -- immediately develops profiles of what the profile is, uses Susan as a profile that describes the target audience. And then we can deliver -- it shows how much we can deliver in terms of impressions at any given time. And that is just hitting the market.

We're actually -- there's a first Pharma conference in Boston next week, and we have a luncheon that we're rolling it out. And it's a huge success of a customer-facing product.

On the inside, our editorial teams, we don't use AI to write editorial, but it helps us develop headlines. It helps us develop keywords. It helps develop summaries. It just makes the process more efficient. And then we use it, we have internal e-commerce businesses and subscription businesses. And in real time, we can test ad copy to drive purchases and customers to our products and change it out immediately based on its performance using an AI model.

Are you -- is that available to the other businesses also? Or is that...

Yes. So I talked a little bit about this, I think, in the last call. So Halo is the first implementation of the technology. The technology was actually developed corporately, and there will be implementations at...

Thing you guys were talking about...

In IGN Entertainment and then within CNET Group and RetailMeNot...

But Halo is the EHG version. And that's where you're starting with that.

Yes. And one thing to just say on that, not to interrupt. But there are a couple of things. One, it's leveraging first-party audience signals, of which we have a lot across lots of properties. Two, it is then leveraging inventory across the pool of Ziff Davis. But then three, it is unlocking the Internet's inventory. So this will be creating audience segments off domain. That's nearly infinite in terms of what you could do across Meta's inventory, Trade Desk inventory, Google Ad Exchange inventory, YouTube inventory, et cetera. So as we think about first-party addressability, use of AI to drive ad outcomes, this is actually -- I'm excited for this.

And that is across everything, the AWS platform. Sorry. By the way, popcorn has very high fiber. So it's actually really good at keeping it...

Well, probably is insufficient to...

Yes, we're going to get -- we'll get you a...

It's a different topic, but yes. So I'm paying attention to the stuff you guys are publishing. M&A, I guess this kind of can -- across both, but maybe within your group and if you provide...

So we're part of the total growth strategy at Ziff Davis, and we've been successful. Part of the model is our operating team gets involved with our small corporate development team to evaluate the deal so that the onboarding is that much more effective. Lose It! as I mentioned, is a perfect example. We talk about multiple doors into these products and multiple monetization models. Lose It! was 100% subscription. We since built what we call a web funnel into it, which can acquire customers for free essentially from the web traffic. It also allows us to evade with new court rulings, the 30% Apple Store commissions when they come in through our web funnel.

The AI team that sits at our Everyday Health Group corporate came out of Lose It! to serve the entire division. We have an affiliate commerce business, which is one of the core businesses from Ziff Davis over time that when you come into to Lose It!, we have nutrition counseling services, we have testing services. So we're getting more rents for every subscriber who comes in that door. And it's just a perfect example of how acquisitions work well here.

Got it. One last question that's come up a lot in all of our advertising coverage, but just the potential regulation around pharma advertising. Do you think that's something that...

How much time do we have?

10 minutes.

Look, I've been in this business a long time. I've been lobbyists knocking my door every year saying the world is coming to an end. And it never quite does for a lot of good reasons. So there's a lot of noise. We don't see anything on the horizon that's fundamentally going to impact our business, there are first amendment issues associated with any ban on DTC advertising. And if there were a ban on DTC advertising, they're largely go after broadcast because the complaint is they bring in a lot of people who otherwise would never be eligible for the drug. Well, that's not the case with targeted digital products.

We know the head of the FDA used to work for us. And as it relates to the drug pipeline has never been stronger. And in terms of drug prices, I think most of the pressure is going to be felt by the PBMs and pharma will find their way around it and still need our services as much as they ever did before. So nothing keeps me up at night despite all the noise.

Got it. Okay. Vivek. So Dan hit on some of the ways AI is helping in Everyday Health. Maybe can you talk about it at the Ziff Davis level? And just as you're talking about some of these things, I'm kind of curious does product, including AI, start at a parent level, the Ziff Davis level and kind of work its way down? Or do things start in certain groups and kind of spread around? I'd be interested to hear how that works.

Yes. No. So -- but before I get to that, I mean, just to put a bow on everything Dan said. So you've got this health care business that does pharma commercialization, digital health growing 9% on a compounded basis with a mid-30s margin at reasonable scale, $140 million of EBITDA. It's a valuable business. Like right there, full stop, end of story, that's a great business. And that's one thing that I just hope we start to be better at communicating to the marketplace.

To answer your question on AI, no, I would say like most things, most things are actually getting developed within divisions, and we're trying to move things around. 4,000 people in the company, about 100 work in corporate. So there's just so much that corporate is going to be able to do and a lot of those functions are public company functions, right? So I would say that a lot of the energy and a lot of the resources happen within the divisions, we do a very good job of taking ideas from one place and planting them in other places. With respect to AI, the first thing I'll say is lots of workforce training. We've standardized actually around Gemini's suite, Google suite of AI. So that's Gemini 2.5, that's Notebook, that's Gem.

We did that because there are so many AI systems and models, it's confusing. It's tough and getting to a standard where we can train everybody on how to fly one plane, we thought made a lot of sense. It doesn't mean that we don't use other things. They are used for various things. But across the workforce, lots of training in Gemini. It also is built in a way for us that meets our data privacy and security concerns, which are major concerns, and you're seeing it more recently, Anthropic just announced that all of a sudden, everything you ingest in there will be retained and trained, and so you have to be careful. And so lots of workforce training and enablement around AI.

I think there are 2 areas that we focus on. Dan talked a lot about product, things that improve the consumer or user-facing experience. And so there are multiple examples of that. We've done a number of things at VIPRE, and we've done a number of things at Ookla. And each one of the businesses has examples like Dan has described. And then productivity. So product and productivity are the 2 vectors. On the productivity side, it's just everyone being able to do their jobs better and faster. And we've seen this all in our careers. I mean, I'm old enough to know I started without an e-mail. And it's almost impossible to imagine doing work without e-mail, right? But when you think about the productivity gain that, that presented, but this is so much more.

So I would say that we view -- putting aside some of the disputes we have around the use of our content, we are major believers in the power of AI to drive experiences and to drive productivity gains inside the company.

Got it. I am luckily not old enough for this, but the old DOR that tell stories about our earnings releases used to come through fax machine to wait for the facts. So...

We used the fax business...

A lot of old school. Okay. So Brett is not here. I'm going to have to ask you some Brett questions -- will be able to fill in. So you've talked about the double-digit total revenue growth, half from M&A, half from organic. Organic growth, again stepped up nicely in 2Q. How do you feel about this outlook? And maybe -- so particularly on the M&A side, what's the outlook? And kind of what are you seeing there?

Yes. I mean, listen, I think we're in the crawl, walk, run, we're in the walk. So last year, we grew the business top line 3%. This year, midpoint of our guidance is 5%. So we're not quite to the double-digit percentages that we target. And so we're hoping we can get into the more of the run phase going into next year. But we're moving in the right direction. So I think that's the first thing. With respect to just M&A as a contributor to that, I think Dan illustrated within his business, there are certain themes that he's looking for. Each of our 5 segments has different themes. So it's not necessarily they're all the same themes.

But here, meaning thematic investing themes, but there are criteria that are consistent. We want strong durable brands, strong durable brands that can transcend technological shifts. We have brands that have seen the shift from print to digital that have seen the shift from desktop to mobile, that have seen the shift from search to social, from app -- from web to apps, like there have been a lot of shifts and AI is yet another one of those shifts. But great brands seem to navigate those wells. That's the first thing.

I think the second thing is that we do look for -- we're very value-driven in our buying. We're very patient. We're very disciplined. We are fairly unemotional in the way we look and do deal making. And so I think we always look for price value, a clear and differentiated and we think unique path to value creation. So what can we do that no one else can do. So it can't just be it's a good business at a good price. It has to be those things. But what is it that we uniquely are situated to do because we have platform, we have technology, we have people, we have synergy. We have something inside of our system that will unlock value that allows us to have a lot of confidence in the underwriting. So that is, I think, a really, really critical piece. And then mathematically, you've heard me say this 20% cash-on-cash returns.

The only other thing I would add that we don't talk about as much, but is often a big part of the internal dialogue is data. We love data-intensive businesses. Dan's got a data-intensive business. The amount of nutrition data and information that he gets to the database that is Lose It! alone is extraordinary. The amount of data that Speedtest sees across 300 million to 400 million installs of that app on phones worldwide is enormous. Often, we just think of data as being a competitive advantage in the context of the businesses they are today. As we think about the AI future and what fuels AI, it will be differentiated data. Data everyone has, that's the commodity. Data that not everyone has, I think, becomes a point of differentiation. So that is another piece that we look for, which are what are their data assets.

So is there M&A that could sit above the kind of specific segments at a parent level. Does that make sense like in a world of AI? Or would you think about expanding into a new vertical or...

New vertical, yes. I wouldn't probably look to buy a business that sits within corporate that corporate manages. We have found businesses that we think have value to the corporation and we will convince one of our businesses, and we did one recently like that, that we put into one of our operating units because look, I don't want corporate running these businesses day-to-day. I think it's a distraction. We're largely in the capital allocation function, right? And that's an important point to make, too. I mean we have $600 million of cash and investments on the balance sheet. If you take our -- what we have talked a lot about, which is our 3x gross debt over EBITDA kind of cap, we have another $700 million of borrowing capacity and then free cash flow of roughly $250 million a year. So we've got a fair amount of capacity to do a lot of things.

Does that mean -- well, so how comfortable do you get levering up then? It sounds like you are comfortable. Does that mean you would make more of the smaller acquisitions or you could potentially reach out and buy something that's...

Listen, the bigger it gets, the higher our conviction needs to be. I tend to prefer deals that are more tuck-in size that fit within businesses like Dan, generally speaking. But look, the other piece of this is, obviously, we've been an active buyer of our shares, right? We bought in 10% of the company over -- since the beginning, I guess, of '24. So I think about 5 million shares. We've got 4.5 million in our share authorization. We're buyers right now. The stock is obviously not where we think it should be, not anywhere close to it. So using our -- using the shareholders' capital to do that is very important, too. I think we have capacity to do both.

Would you lever up to buy back stock?

I think we have cash sitting on the balance sheet. We've got to put the cash to work.

Yes. Okay. Any questions from the audience?

[indiscernible] here. With the stock trading at 1x EV to rev, less than 4x EBITDA, what gives you the confidence in going out and making acquisitions rather than just taking all that cash and returning it to shareholders?

Look, I think there's -- as I said, I think there's room for both. I think in the end, I get this question all the time, which is, hey, look, if you can't buy it under 4x what are the trading multiples, why would you buy? I think in the end, if the cash-on-cash returns make sense, I think over time, I think the market starts to reevaluate the company and we get a recovery in the share price. But I don't think it's either/or. I think that the opportunity for us to create value both ways is there. I think in this particular moment, particularly from an acquisition point of view, the very things that I think are weighing on particularly a lot of digital media assets, I think the market for those acquisitions is quite interesting.

I think this is an incredibly interesting buying time by of the fear. There's an enormous amount of fear right now with respect to anything that is open web, anything that is browser, anything that is advertising, anything that is content because right now, I think the overly simplistic view is AI is an existential threat to those businesses. We think, in some cases, maybe, but in many cases, no, and that's where I think we see a pretty interesting buying opportunity at the moment.

All right. That's our time. Thank you. Good note to close off on. And that's the day. Thanks, everyone, for joining. Thank you, guys for being here, closing off our day. It's always a pleasure.

Appreciate it.

Good day, ladies and gentlemen, and welcome to the Ziff Davis Second Quarter 2025 Earnings Conference Call. My name is Tom, and I will be the operator assisting you today. [Operator Instructions]

On this call will be Vivek Shah, CEO of Ziff Davis; and Bret Richter, Chief Financial Officer of Ziff Davis. I will now turn the call over to Bret Richter, Chief Financial Officer of Ziff Davis. Thank you. You may begin.

Thank you. Good morning, everyone, and welcome to the Ziff Davis Investor Conference Call for Q2 2025. As the operator mentioned, I am Bret Richter, Chief Financial Officer of Ziff Davis, and I am joined by our Chief Executive Officer, Vivek Shah. A presentation is available for today's call. A copy of this presentation is available on our website. When you launch the webcast, there is a button on the viewer on the right-hand side, which will allow you to expand the slides. If you have not received a copy of the press release, you may access it through our corporate website at www.ziffdavis.com. In addition, you'll be able to access the webcast from this site. After completing the formal presentation, we'll be conducting a Q&A. The operator will instruct you at that time regarding the procedures for asking questions. In addition, you can e-mail questions to [email protected].

Before we begin our prepared remarks, allow me to read the safe harbor language. As you know, this call and the webcast will include forward-looking statements. Such statements may involve risks and uncertainties that would cause actual results to differ materially from the anticipated results. Some of those risks and uncertainties include, but are not limited to, the risk factors that we have disclosed in our SEC filings including our 10-K filings, recent 10-Q filings, various proxy statements and 8-K filings as well as additional risk factors that we have included as part of the slide show for the webcast. We refer you to discussions in those documents regarding safe harbor language as well as forward-looking statements. In addition, following our business outlook slides are our supplemental materials including reconciliation statements for non-GAAP measures to the nearest GAAP equivalent.

Now let me turn the call over to Vivek for his remarks.

Thank you, Bret, and good morning, everyone. We're very pleased with our second quarter results, which exceeded expectations, with revenues growing nearly 10% and adjusted EBITDA growing nearly 12% year-over-year. This was our strongest quarter of revenue growth since 2021, and in that sense, we delivered truly breakthrough results and it also represents the fourth consecutive quarter of revenue growth for Ziff Davis. While we continue to execute on our operating plans, we remain committed to repurchasing our shares and have successfully completed 5 tuck-in acquisitions in the first half of the year. Our healthy balance sheet continues to support ample opportunities for capital allocation. As was the case last quarter, 4 of our 5 reportable segments grew in revenues in Q2. These 4 segments, which historically were combined into the Digital Media segment grew nearly 13%. As importantly, our fifth segment, Cybersecurity & Martech declined less than 1% in the quarter and is poised to return to growth in Q3. Having the Cybersecurity & Martech segment contributing to overall growth would be an important milestone for the company.

Let me share some observations about each of our 5 segments. As a reminder, this new reporting structure was implemented earlier in the year to provide greater transparency and a clear appreciation of the intrinsic value of our key businesses. Tech & Shopping's revenues grew by over 11%, with adjusted EBITDA growth of over 5%, supported by the CNET acquisition and some improving trends in our B2B business. In fact, in Q2, Spiceworks launched a successful paid subscription version of its cloud help desk software, which helps IT administrators manage help requests from employees.

SaaS offering already has over 20,000 paying business customers. CNET Group also renewed its partnership with Best Buy which allows both Best Buy and CNET Group sales teams to sell media inventory across each other's properties, while CNET content is also featured in Best Buy's retail touch points.

Gaming & Entertainment grew nearly 8% in revenues, with adjusted EBITDA growth of almost 24%. IGN hosted its second annual fan facing event, IGN Live, in Los Angeles in June, which has now ostensibly replaced the long-standing E3 conference. We had over 8,000 attendees in person, with over 27 hours of live programming and over 200 partners in games, film, TV, streaming, toys, comics, consumer packaged goods and more.

In addition to the in-person event, content was streamed on over 35 platforms over the course of IGN's 2-week Summer of Gaming June programming. The event reached over 300 million fans around the world, up 91% year-over-year and video views were 202 million, up 26% year-over-year. Social impressions were up 42% year-over-year at 367 million, while Instagram views were up 191% and TikTok views were up 300% year-over-year. The diversity of engagement and significant growth highlights the reach and depth of the global IGN community.

Health & Wellness had a blockbuster quarter, with revenues up nearly 16% and adjusted EBITDA up 11%. Both first and second quarter set records for the segment as our pharma commercialization services and Health & Wellness offerings both continue to be very strong. Our ability to deliver positive tangible results for pharma with both patients and providers continues to place us in a competitively strong position. Our continuing medical education business, PRIME Education, had a record quarter led by its quality improvement offering, which helps health systems address key challenges in healthcare delivery and generates real world data to demonstrate ROI to pharma customers.

And in our pregnancy and parenting business, we are reaping the benefit of the investment we made to build out our clinical studies business. Clinical studies include both pregnancy exposure registries and clinical trials, which play a crucial role in providing safety information for researchers and healthcare providers to understand the potential effects of drugs on pregnancies. With our unique market reach, we have been successful in supporting enrollment, which can be particularly challenging in this cohort. At the same time, our consumer Health & Wellness businesses, especially Lose It!, have strong momentum, and we have seized the opportunity to sell Lose It! subscriptions directly to consumers via the web instead of exclusively through the App Store, which is expected to have positive implications for the margin profile of the business.

Connectivity also posted a tremendous quarter, with revenues up over 14% and adjusted EBITDA up over 12%. It's fantastic to see this segment returning to double-digit organic growth which when combined with its nearly 50% adjusted EBITDA margins qualifies it as a Rule of 60 business. Connectivity's growth reflects strong demand for a number of its key products and services. Speedtest revenue in Q2 reflects demand from service providers who are seeking greater visibility and competitive network insights by using quality of service and network performance benchmarking data to differentiate their services from their competitors.

Another key driver of Q2 revenue was expansion in emerging markets, particularly in EMEA and APAC regions, and demand from new customers who licensed the Speedtest Award to support their marketing efforts. In addition, RootMetrics benefited from service growth from existing clients who purchased more comprehensive testing packages to validate new 5G network upgrades and better understand their network performance against competitors. Downdetector also received strong interest from large enterprise clients and service providers to improve real-time observability of online services as an early warning system to improve their responsiveness to outages and customer service degradation. All of this, coupled with revenue growth from Ekahau, resulted in a terrific quarter for the business.

Cybersecurity & Martech was close to delivering flat revenues in the quarter and posted over 5% adjusted EBITDA growth. And as I mentioned earlier, we are optimistic about the segment returning to revenue growth starting in Q3. Momentum in our VPN business accelerated in Q2, driven by a combination of direct customer acquisition, new partnerships and product enhancements that support customer retention and ARPA growth. In Q2, we launched VIPRE Integrated Email Security, a significant leap forward in our enterprise-grade cloud-based e-mail security designed for small and medium businesses. VIPRE IES was designed to integrate seamlessly with Microsoft 365 and is powered by an AI engine leveraging natural language processing, semantic analysis and machine learning to identify and block threats that often bypass traditional e-mail filters. It's one of several examples as to how we're leveraging AI to deliver both product innovations and operational efficiencies across our portfolio.

At RetailMeNot, we've deployed an AI customer service chatbot that has achieved a roughly 50% case deflection rate for inbound chats. This means that half of the customers who initiate a chat with our customer support bot are able to get their issue resolved without needing to be transferred to a live human agent. This is a great example of using AI to automate and scale our support while enhancing the customer experience.

In our Health & Wellness segment, the Lose It! app has harnessed AI in an effort to deliver real, measurable health outcomes for its consumers. By introducing AI-powered voice and photo meal logging, the team has not only made tracking meals easier and more intuitive, but has directly helped users achieve their goals. Members are logging meals 3.5x faster and tracking twice as many foods, making the habit of daily food journaling stick. This increased engagement translates directly to success, with users achieving 6% more weight loss on average.

We're also leveraging AI to refine how we serve our advertisers. For instance, we've created an AI platform that creates precise audience segments. This platform is powered by hundreds of millions of data signals we collect real-time from across our diverse portfolio of properties and translate this proprietary privacy-protected data into what we call moment of influence solutions. These audience segments can be seamlessly activated across individual Ziff Davis properties, the broader Ziff Davis network and the open web and social media. The initial response from ad clients has been very favorable.

Our healthy balance sheet with substantial cash and leverage capacity serves as the foundation for our capital allocation strategy. We continue to adhere to a patient and disciplined approach to identifying and integrating durable, high-quality assets, while consistently buying back our stock. Of the 3 acquisitions we consummated in Q2, I was particularly pleased to see 2 tuck-in acquisitions in our Cybersecurity & Martech segment, one that strengthens our e-mail deliverability services and the other enhances our e-mail archiving offering. The third was an acquisition of the Well+Good brand and content library for our Health & Wellness segment, which we've already migrated onto theSkimm platform, which itself was acquired earlier in the year and is performing ahead of expectations.

Our acquisition program continues to focus on strong and enduring brands in high-value verticals, businesses in which we can unlock value through platforms, people and know-how and transacting at reasonable valuations and generating attractive cash-on-cash returns.

With that, let me hand the call back to Bret.

Thank you, Vivek. Let's discuss our financial results. Our earnings release reflects both our GAAP and adjusted non-GAAP financial results for Q2 2025. My commentary will primarily relate to our Q2 2025 adjusted financial results and the comparison to prior periods. Please see Slide 4 for the summary of our financial results.

Q2 2025 revenues were $352.2 million as compared with revenues of $320.8 million for the prior year period, reflecting growth of nearly 10%. Q2 2025 adjusted EBITDA was $107.7 million as compared with $96.3 million for the prior year period, reflecting growth of nearly 12%. Our adjusted EBITDA margin for the quarter was 30.6%. We reported second quarter adjusted diluted EPS of $1.24 as compared with $1.18 in Q2 of 2024, reflecting growth of more than 5%. This increase reflects higher adjusted EBITDA and lower fully diluted shares outstanding. This was partially offset by a number of factors, the largest of which related to changes in certain foreign exchange rates, which drove an increase in other loss net for the quarter that reduced our Q2 2025 EPS by approximately $0.10 per diluted share.

Our second quarter financial results reflect significant growth and it's worth repeating Vivek's observation that this quarter reflects the company's highest level of quarterly total revenue growth since 2021. And while a portion of this growth was contributed by recently acquired businesses, the quarter also reflects positive total organic growth, including organic growth from contributions from our Gaming & Entertainment, Health & Wellness and Connectivity segments. Certain brands within Technology & Shopping and Cybersecurity & Martech contributed to organic revenue growth as well.

We are very pleased with these results and the progress we have made through the first half of 2025. We believe that these results reflect the diversity and resiliency of our revenue streams and highlight the ability of our businesses to navigate the demands of their respective business environments and collectively grow revenues while continuing to meet our overall profitability goals.

Slide 5 reflects performance summaries for our 2 primary sources of revenue, advertising and performance marketing and subscription and licensing. Both of these revenue sources grew significantly in the second quarter of 2025. Q2 2025 advertising and performance marketing grew 15.5% as compared with the prior year period, while subscription and licensing revenues grew by 5%. Q2 2025 other revenues declined by $2.2 million year-over-year, primarily reflecting a decline in the contribution from our Humble Games Publishing business.

Slides 6 through 10 reflect the Q2 financial results of each of our reportable segments, which Vivek discussed in some detail already. But again, 4 of our 5 segments grew revenue in Q2 2025, while Cybersecurity & Martech's revenue declined by less than 1% as compared with the prior year period. All 5 of our segments delivered significant adjusted EBITDA growth during the second quarter.

Please refer to Slide 11 to discuss our balance sheet. As of the end of Q2 2025, we had $457 million of cash and cash equivalents and $140 million of long-term investments. We also have significant leverage capacity on both a gross and net leverage basis. As of June 30, 2025, gross leverage was 1.7x trailing 12 months adjusted EBITDA, and our net leverage was 0.8x and 0.5x, including the value of our financial investments.

During the second quarter, we closed 3 small acquisitions to expand the product portfolios of our Health & Wellness and Cybersecurity & Martech businesses. We anticipate that during the balance of 2025, we will continue to be an active and disciplined acquirer of companies and assets that we believe will enhance the ability of our existing businesses to serve their respective markets. Overall, during the first half of 2025, we deployed more than $50 million of cash for acquisitions. And during the third quarter, we have already closed the transaction to further diversify the product offering of our Martech business.

During the first quarter call, we noted our intent to continue to repurchase our common stock. And since the beginning of the second quarter, we have repurchased nearly 1.4 million Ziff Davis shares. And since June 30, 2024, we deployed more than $170 million and repurchased more than 4 million Ziff Davis shares or approximately 10% of our shares outstanding. We have more than 4 million shares remaining under our stock repurchase authorization, and we continue to believe that the current trading level of our stock does not at all reflect the intrinsic value of our underlying businesses. As a result, while we will continue to ensure that we have ample capital to support our M&A program, we plan to continue to repurchase shares of our common stock.

Turning to Slide 13. We are reaffirming the fiscal year 2025 guidance range that we presented in February 2025. We have had a solid first half of 2025 and as we discussed, significant second quarter growth. Our guidance range is broad and has a top end that reflects fiscal year 2025 projected results that imply more than 7% revenue growth, nearly 10% adjusted EBITDA growth and 10% adjusted EPS growth as compared with fiscal year 2024.

The breadth of our guidance range reflects a range of different positive outcomes. And because of this, we are not altering the range at this time. With regards to the balance of the year, we currently anticipate at least mid-single-digit revenue growth for both Q3 and Q4 2025, with Q4 potentially being a bit stronger than Q3. With regard to adjusted EBITDA, we expect similar margins in each of our third and fourth quarter as compared with 2024, implying stronger adjusted EBITDA growth in Q4 as compared with Q3. Adjusted diluted EPS is expected to reflect the implied growth in adjusted EBITDA and may continue to be impacted by changes in the value of certain foreign currencies, amongst other factors.

We expect our Health & Wellness and Connectivity businesses to be the largest contributors to second half growth. And note, fourth quarter is typically our seasonally largest revenue quarter.

Slide 20 includes a reconciliation of free cash flow. Q2 2025 free cash flow was $26.9 million, 7.5% higher than the prior year period. As of the end of Q2 2025, trailing 12 months free cash flow was $233 million, nearly 27% higher than the prior trailing 12-month period. Our Q2 2025 financial results were robust. They reflect the highly diverse mix of revenue that the company's products and services generate as well as the company's ability to maintain significant adjusted EBITDA margins during a period of total growth.

We believe our Q2 results and the incremental insight into the performance of each of our 5 divisions, which we now provide through our expanded reportable segment disclosures, should allow investors to more fully appreciate the diversity of our revenues, the strength of our margins and the scale of each of our businesses. Overall, we believe that our second quarter results strengthened our overall outlook for 2025.

As we move into the second half of 2025, we plan to use our balance sheet to continue to support our M&A program, and we expect to continue to purchase our stock at its current depressed trading level. Importantly, we remain committed to identifying and pursuing all opportunities that we believe offers strong prospects to enhance shareholder value.

With that, I will now ask the operator to rejoin us to instruct you on how to queue for questions.

[Operator Instructions] And the first question today is coming from Shyam Patil from Susquehanna.

Nice quarter. I had 1 question I guess for Vivek. With the increased segment level disclosures that you guys are providing, what are you guys hoping to communicate to the market, especially regarding the intrinsic value versus the current public market valuation?

Yes. No, look, thanks for the question. And look, I think we're absolutely hoping that investors take the time to assess each of the 5 segments. So as I noted, 4 of them collectively grew 13%, but unpacking that, we've got 3 of the segments growing double digits, one high-single digit and the 1 that didn't grow, Cyber & Martech, we believe, will grow. So I think just there are differing levels of growth and margin profiles, the adjusted EBITDA similarly collectively grew 12%, but the segments grew from a range of 5% to 24%. So each of these is worth spending time on.

And I think more broadly, as they -- as investors kind of peel the onion and study the company, we hope they appreciate a few things: that we have a pharma commercialization and consumer health platform that's growing double digits. That's the Health & Wellness segment. We've got a data-as-a-service business with all kinds of AI tailwinds, also growing double digits. And that's the Connectivity business. We've got a platform at the center of the fastest-growing entertainment category, which is video games, and that's the Gaming & Entertainment segment. And then finally, we have a software unit that pointed to growth with the Cybersecurity business of scale with great margins and organic growth now. And we've got an intent-driven Tech & Shopping portfolio which has got great EBITDA growth as well.

And so it can -- I know at times, it can feel like a lot, but I do think that if investors spend time studying the various elements, I think you come to a pretty compelling investment opportunity. And I'd also say to our sell-side and buy-side analysts, I think if you could go through some of the parts valuation exercise, I think that would be revealing.

So look, I know it's only been -- it's been relatively new. We're only a couple of quarters into the new segment reporting. It takes a while, I think, for this kind of information to get digested. And by the way being very responsive to the market, this is something that shareholders have been asking for, for some time. And so we're pleased to be able to provide it, and we hope that it brings more insight into, as you say, the intrinsic value of the company.

Your next question is coming from Cory Carpenter from JPMorgan.

I had 2, I think both for you, Vivek. Maybe just to start, if you could update us on trends you're seeing broadly in the ad market. Last time we talked 3 months ago, of course, there was a lot of disruption going on around Liberation Day. And then secondly, good to see you back in double-digit growth. Just maybe how are you thinking about the sustainability of the trends you saw this quarter and Vivek, could you just remind us of how you think about the right long-term growth and margin framework for the company?

Yes. Thanks, Cory. So the ad business grew a little over 15%. With the new segment disclosure, you can kind of see the composition by category. So Health & Wellness is 42% of the ad business; the Shopping & Tech is kind of another 40%, but Shopping is about 21%, Tech is about 19%. So you get a sense of where that break is, and then Gaming is about 16%. So in order, I guess, of importance, what I would say is Health is very strong. Great drug pipeline, high-teens growth. We feel very good about this category near term, long term.

Shopping was down a touch, but that's mostly the Offers brand. So I wouldn't say that's a reflection of necessarily market and the Offers brand is a brand that we put into the managed decline category. So we feel reasonably good about where retail sits.

Tech was strong. And yes, CNET was obviously a major contributor in our equation, but consumer tech generally outside of CNET is strong and B2B is improving. It's still declining, just to be very clear, but it's declining less than we thought, which is really good. And then Gaming, it's kind of up mid-teens. So as I like to do when I talk about the advertising market, I do like to break it down by category because I think it is -- it does operate categorically versus in aggregate, but generally feeling really good about that.

With respect to your thoughts, question around long-term growth, look, I think our mindset hasn't changed, which is we expect to be a double-digit total growth company from a revenue point of view, roughly half organic, roughly half inorganic. Those delineations are always funny because of the way in which we do organic and inorganic calculations. You can have a business that you've acquired that is growing significantly organically and that we put into our inorganic category. So put aside, I'd say roughly 50-50 double-digit growth and then mid-30s margin. So I don't think that's changed. I think that's been the way we've been thinking about the business for some time, as you know. That hasn't been what we accomplished over the last little bit, but we're both glad to be back there. And that's where we expect to be long term.

Your next question is coming from Ross Sandler from Barclays.

Just had a question on the incremental EBITDA margin. So specifically, it looks like given the new segment breakdown, which thank you very much for that, looks like Tech and Health, your 2 biggest ad revenue pools, both growing solid but had margin contraction in 2Q. So could you just unpack, some of that's probably onetime kind of acquisition-related costs or are there other things dragging that down? And then more broadly, how do you view -- now that we're growing organically across the board, how do you view the incremental margin and how that might flow through in the future?

Yes. No, Ross, I would say that I can't point to anything specifically around any changes in the cost structure of the business. And so a lot of this is when you divide our company, which is relatively small, into 5 pieces, I think you can see some lumpiness because similarly, Gaming & Entertainment's EBITDA grew 24%, right? So I often say, like it's better to look at these things on a multiple quarter basis to really get a sense of what the true kind of EBITDA margin is for these segments. So I wouldn't say that there's anything in specific in any of these businesses that I would point to that speaks to kind of a structural change in the margin profile of the business.

Bret, I don't know if you...

I think that's right. I think we do get to sort of the math of relatively small numbers when you take 1% of the revenue item in a single quarter. In any given quarter, you have mix dynamics, you have campaign dynamics, you have one-off dynamics, you have investment dynamics. They could be for people, they could be in -- with vendors. So I think it's more important, as Vivek said, to keep that lens pretty wide and compare it to our overall expectations of achieving sort of mid-30s adjusted EBITDA margins. And in any given 3-month period, you're going to see some variability. M&A is also a factor as we -- in different divisions, in as we mentioned, Tech & Shopping, CNET, whatnot. So...

And then just overall, as a company, obviously, on a year-over-year basis, we have seen some margin expansion in the quarter. There was 1 thing as I was thinking about this in Tech & Shopping we have this PC game investment business where we've been investing in games. That is a business that we are essentially sunsetting. That has actually been a drag. So that might be something there, but that's being sunset. And so that might be 1 small piece on the Tech & Shopping but again small...

Small piece in dollars to move -- you could be within about 1 point of margin.

Your next question is coming from Ygal Arounian from Citi.

I guess -- sorry, I may have missed if there was commentary on this on -- because I just jumped on a little bit late. I think there's been a lot more talk this quarter than we've heard even over the past few so it feels like there's an acceleration of the trends around agentic AI -- or sorry, not agentic AI, but AI overviews and search and the distribution of traffic across the open web. And I know you guys talked before about how you're positioned there and a lot of your traffic coming directly to you guys. And maybe just an update on what you're seeing there and how you're feeling? And then I guess at the same time, if you can just talk about your approach with LLMs and if that's changed at all; how you're thinking about that.

Yes. No, no. Thank you. So look, I'll reiterate Ygal, what I shared last quarter, which is 35% of the company's total revenues are ads on our O&O web traffic, and about 40% of that comes from search. So that gives everyone kind of an understanding of kind of order of magnitude. And I think when you multiply those numbers together, you come to the conclusion that we are different than a lot of other businesses that one might compare them -- compare us to. I mean, look, there's no doubt we're experiencing a bunch of search engine result page volatility, but we've been talking about zero-click search probably for a decade, which is why we're not leveraged to SEO, we generate a ton of non-web engagement. And frankly, so much of our revenues are not actually traffic based.

And I think this is the most important aspect to understand. We are not a programmatic ads business. I mean that is less than $50 million of our annual revenue or programmatic ads. And so that's just something I think to reiterate. And look, I listed a number of examples of how we monetize our brands, right, IGN Live, the parenting and pregnancy clinical studies business, keep partnerships like Best Buy, Spiceworks software. That's just a few. I could go on and on. But it's a far more dynamic and diversified business model that, again, I think as investors dig into the company with our new segment reporting, we'll recognize that I think we've given a little bit too much oxygen to this topic when we're talking about our business. And by the way, a significant portion of our adjusted EBITDA, Connectivity and Cyber & Martech is not part of this AI search narrative at all.

With respect to your question on licensing and relationships with large language model owners and operators, obviously, we continue our lawsuit against OpenAI. We feel it's important that we protect our IP and ensure that we get fair compensation. We think our content is valuable. We know it's valuable. It's been scraped an awful lot and we should get compensated for that by AI systems. And so -- but at the same time, I mean, look we want to partner with AI companies going forward. We are continuing many dialogues around arrangements and partnerships so that we can get a fair value exchange.

The other thing we did, as you might have seen, is as of the first of July, we commenced blocking of known AI bots at the CDN level with partners like Cloudflare to prevent unauthorized access. And the reason we did that was up until this point, up until that point, we were using robots.txt, and the problem with robots.txt, as we've come to see, is that it's a directive that bots can and have chosen to ignore. So -- so blocking these bots at the CDN level is certainly more effective. And we think that's important, too. So I think through the combination of activities, we think we can move the dialogue into a more constructive and productive place.

Okay. Great. And then I want to follow up on the moment of influence product and it sounds new and interesting. And maybe talk about the go-to-market approach there a little bit more, what that opportunity is and expand a little bit more on what you're seeing so far from advertisers.

Yes. No. So we have built, and it's a proprietary AI-based essentially data management platform. We're ingesting all sorts of signals across all of our touch points. It goes into a system that, based on what a marketer's targets and goals are, then spits out essentially the who, who should you be targeting, when and then where and executing campaigns that run on our properties, on our properties' content on social platforms, video platforms and then more broadly on the open web. And so in many ways, it's limitless inventory against a fairly large signal capture.

Our go-to market, however, is not a product that would be sold at a corporate level. Ziff Davis does not sell advertising at a corporate level, we do it within each of our verticals. And so within each of our selling verticals, so say, Health & Wellness, the Everyday Health Group; or IGN entertainment; or the CNET Group; or the RetailMeNot group as sort of the key selling organizations.

Each of those organizations will have their own branded version of this technology to go to market to supplement the existing ad products. And so the first one being rolled out is called [ Halo ], and it is within the Everyday Health Group, and that has received a fair amount of traction. But there are those versions in each selling group that will roll out over the course of the next quarter or 2.

We're very excited about it because I think we've gotten to the point where the data sets we have, leveraging AI gets us to a level of addressability and targetability that we think can be really, really compelling. And remember, this is all first-party data. This is all privacy protected, which is very important, particularly in a lot of the categories in which we operate. So we're excited.

Your next question is coming from Robert Coolbrith from Evercore ISI.

Just wanted to ask within Health & Wellness, it seemed like you had a pretty notable sort of uptick in -- not so much spend per advertising customer, but the participation of advertising customers. So just wondering if there's anything you can talk through in terms of the trends and what we maybe expect over the next couple of quarters, just given that we don't have a ton of historical data. But just anything on the trends there that really sort of lifted advertiser participation. I think that your growth in advertising customers was maybe up, I want to say 14% year-over-year. So notable acceleration there.

Yes. No. Thank you for the question. And I think, look, I think part of why we're seeing a larger advertiser count is that while pharma is the core of what Health & Wellness really does do and pharma commercialization in the market is very strong, we have been looking to expand more broadly to more Health & Wellness brands or brands that have a health or wellness marketing component or target. And so I think we've had success doing that. And brands like theSkimm have been really helpful in helping us expand our base. And so that -- part of what that business is looking to do is to diversify. Look, the pharma category is fantastic. I think it's a real competitive advantage, and it's one that we like a lot. It doesn't mean we couldn't -- we shouldn't participate in other related and adjacent categories. And as you know, overall, just societally the focus on Health & Wellness and longevity. That's another big driver.

There are just so many longevity brands and solutions out there. So I think, demographically, we're kind of well aligned, I think, with brands like theSkimm I think we do really well in those categories. So I think it's really -- there's a bunch here to like.

The other thing is, I'll point out that our Lose It! property, which is a subscription-based property, has started to accept advertising for the free customers that we have that are pretty substantial. Again, a pretty good market, right? These are people who are interested in calorie tracking and meal logging and weight loss and fitness and so that opens up a lot of other interesting advertising opportunities.

Great. Just a follow-up also on Connectivity. Almost the reverse dynamic, you're -- I think you had an inflection in your quarterly revenue per customer there that was fairly pronounced. If you could just talk through some of the trends there as well.

Yes. That's a funny one. I'll tell you what. This is an example of creating a set of common metrics across 5 divisions that aren't always common as we just pointed out. And so this is a little bit of a different animal where you have a combination of high price point customers on the Speedtest Intelligence side matched with lower price point customers on the Ekahau side. And so sometimes that has a little bit to do with mix and it's a computed metric more than a managed metric, if I'm going to be honest with you. So it's not something I've even looked at. It would be something that I'd have to probably go in and do a little bit of gathering, which we can do and look at.

But overall, I think what it probably points to is we're seeing a lot more growth out of Speedtest Intelligence and RootMetrics and the businesses that are at a higher price point. Ekahau is growing, but it's not growing yet at the rate that we'd like it to grow, and that is that I'm excited for. It's not showing up yet. It's probably more of a 2026 event, but the WiFi 7 router refresh will be a really interesting tailwind for this business, but it's not playing out yet.

Thank you. There are no other questions in queue at this time. I would now like to hand the call back to Bret Richter for any closing remarks.

Thank you very much, Tom, and thank you, everyone, for participating in today's call. We look forward to our ongoing dialogue with you in the balance of the year. Have a great day.

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