Q2 2026 Ziff Davis Inc Earnings Call Transcript
Key Points
- Completed the sale of connectivity business to Accenture for $1.2 billion at a 14.5x multiple, demonstrating asset quality and unlocking shareholder value.
- Aggressive share repurchase program, buying back 4.5 million shares in 2026 (nearly 11% reduction in shares outstanding), boosting adjusted EPS by 13%.
- Strong cash position with $1.6 billion in cash and $734 million net cash, enabling debt repayment and future capital allocation flexibility.
- AI-driven code development has doubled AI-authored code share in one quarter, with 24% more code shipped on lower headcount, improving operational efficiency.
- Tech & Shopping segment showed significant improvement, with revenue decline narrowing to 5% from 13% in Q1 and 18% in Q4, while adjusted EBITDA rose over 8%.
- Gaming & Entertainment delivered record quarter at Humble Bundle, with IGN's MapGenie traffic up 30% and Maxroll up 11% year-over-year.
- Cybersecurity & Martech segment grew nearly 1% in revenue and EBITDA, with IPVanish growing for the fifth straight quarter and SMTP.com delivering double-digit growth.
- Health & Wellness saw sequential growth in HCP advertising at MedPage Today, with expectations for continued sequential improvement through 2026.
- Expanded hospital media network with University of Pittsburgh Medical Center, enhancing exclusive digital advertising partnerships.
- Strong free cash flow generation of $54 million in Q2, up 100% year-over-year.
- Consolidated revenue declined 2.7% year-over-year, with Tech & Shopping and Health & Wellness segments experiencing lower revenues.
- Adjusted EBITDA declined 3.7% year-over-year, with margin slightly down to 26.8% from 27.1%.
- Persistent headwinds in traditional search traffic, with AI Overviews now present in 50% of relevant Google queries, pressuring web traffic.
- Health & Wellness revenue down nearly 5% and adjusted EBITDA down nearly 10% due to reduced HCP advertising spend from large pharma clients shifting to lower-cost platforms.
- Gaming & Entertainment adjusted EBITDA margins declined despite revenue growth, due to higher marketing and content costs at Humble Bundle.
- Advertising & Performance Marketing revenue declined 6% year-over-year, reflecting ongoing challenges in ad monetization.
- Expectation of continued low-to-mid single-digit revenue decline in Q3 2026, with Q4 showing only slight improvement.
- Planned $200 million tax payments and $149 million convertible debt repayment will reduce cash reserves, though still leaving a strong position.
- Free cash flow conversion in H2 2026 expected to be negatively impacted by professional fees and taxes related to the Connectivity sale.
- Uncertainty in AI content licensing, with management choosing to be patient rather than sign early agreements, potentially delaying revenue opportunities.
Good day, ladies and gentlemen and welcome to the Ziff Davis second 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. 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 second 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 of Vivek Shah.
A presentation is available for today's call. The presentation and our earnings release are available on our website, www.ziffdavis.com. 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
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