Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ziff Davis Inc (ZD, Financial) is reaffirming its guidance for fiscal year 2024, expecting adjusted EPS to be closer to the high end of the range.
- The company has been actively deploying capital, including $84 million for share buybacks in Q2, and plans to continue repurchasing shares.
- Recent acquisitions, such as Gamer Network and the pending acquisition of CNET, are expected to strategically enhance existing platforms and compound growth.
- Ziff Davis Inc (ZD) is incorporating AI into its products, such as the Down Detector Situation Report and IGN's chatbot, which could enhance user engagement and retention.
- The company maintains a strong balance sheet with $687 million in cash and cash equivalents, and has expanded its revolving credit facility to $350 million.
Negative Points
- Q2 2024 financial results were below expectations, with revenues down 1.6% year-over-year and adjusted EBITDA declining by 9.8%.
- The Digital Media segment was flat, with tech media revenue swinging back to negative, particularly impacting the B2B side.
- The cybersecurity and martech segment experienced a 5.8% decline, attributed to timing impacts from Q1.
- Advertising and performance marketing revenue declined by 2.7% in Q2 2024, with lower-than-expected demand for B2B lead generation services.
- Organic revenue declined by 5% in Q2 2024, indicating ongoing challenges in achieving organic growth.
Q & A Highlights
Q: Congrats on the CNET deal. Can you share more about your M&A strategy and areas of opportunity?
A: Vivek Shah, CEO: We're seeing softened market expectations since 2021, with private equity firms under pressure to return capital. This creates opportunities, especially in tech, gaming, retail, and health. We're optimistic about M&A, with recent deals like Gamer Network and CNET aligning with our strategy.
Q: What gives you confidence in the expected reacceleration in gaming, connectivity, and health and wellness?
A: Vivek Shah, CEO: Despite a challenging June, we're seeing modest organic improvements and cost control measures that will expand margins. Our advertising market is mixed, but consumer tech and health are performing well, and gaming has been resilient.
Q: Can you explain the June pullback across several verticals?
A: Bret Richter, CFO: It wasn't macro-related but due to high customer concentration and timing of contracts. Large customer movements and campaign shifts impacted our quarter, but we've taken actions to balance investments with expected revenue.
Q: How does the CNET acquisition impact your advertising strategy?
A: Vivek Shah, CEO: CNET is strategic for us, enhancing our position in the tech vertical. It aligns with our model of direct advertising and affiliate commerce, similar to PCMag and Mashable. We expect it to strengthen our market position.
Q: Are you seeing any impact from AI Overview on your traffic?
A: Vivek Shah, CEO: No significant impact as AI Overview's presentation rate is low. When it does appear, it elevates our links, which is positive. We're also exploring AI's role in enhancing user experience and retention in our subscription offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
