Ziff Davis Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 7, 2025

Key Takeaways

  • Positive Sentiment: The company reported Q2 revenues of $352.2 million, up nearly 10%, and adjusted EBITDA of $107.7 million, up 12%, marking its strongest quarterly revenue growth since 2021.
  • Positive Sentiment: Four of five reportable segments delivered year-over-year revenue growth, while the Cybersecurity & Martech segment declined less than 1% and is poised to return to growth in Q3.
  • Positive Sentiment: The Health & Wellness segment achieved a record quarter with revenues up nearly 16% and adjusted EBITDA up 11%, driven by strong demand in pharma commercialization and continuing medical education.
  • Positive Sentiment: Connectivity posted double-digit organic growth—revenues up over 14% and adjusted EBITDA up over 12%—and maintained nearly 50% EBITDA margins, qualifying as a “Rule of 60” business.
  • Positive Sentiment: Ziff Davis completed five tuck-in acquisitions in H1, repurchased approximately 1.4 million shares in Q2 (over 10% of outstanding shares since June 2024), and reaffirmed its disciplined capital allocation strategy.
AI Generated. May Contain Errors.
Earnings Conference Call
Ziff Davis Q2 2025
00:00 / 00:00

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Operator

Good day, ladies and gentlemen, and welcome to the Ziff Davis Second Quarter twenty twenty five Earnings Conference Call. My name is Tom, and I will be the operator assisting you today. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. On this call will be Vivek Shah, CEO of Ziff Davis and Brett Richter, Chief Financial Officer of Ziff Davis.

Operator

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

Bret Richter
Bret Richter
CFO at Ziff Davis

Thank you. Good morning, everyone, and welcome to the Ziff Davis Investor Conference Call for Q2 twenty twenty five. As the operator mentioned, I am Brett Richter, Chief Financial Officer of Zip 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.

Bret Richter
Bret Richter
CFO at Ziff Davis

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.zipdavis.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 and A. The operator will instruct you at that time regarding the procedures for asking questions.

Bret Richter
Bret Richter
CFO at Ziff Davis

In addition, you can e mail questions to investorziffdavis dot com. 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 ks filings, recent 10 Q filings, various proxy statements and eight ks filings, as well as additional risk factors that we have included as part of the slideshow for the webcast.

Bret Richter
Bret Richter
CFO at Ziff Davis

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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

Thank you, Brett, 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 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 five tuck in acquisitions in the first half of the year.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

Our healthy balance sheet continues to support ample opportunities for capital allocation. As was the case last quarter, four of our five reportable segments grew in revenues in Q2. These four segments, which historically were combined into the Digital Media segment grew nearly 13%. As importantly, our fifth segment, Cybersecurity and declined less than 1% in the quarter and is poised to return to growth in Q3. Having the Cybersecurity and Martech segment contributing to overall growth would be an important milestone for the company.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

Let me share some observations about each of our five segments. As a reminder, this new reporting structure was implemented earlier in the year to provide greater transparency and a clearer appreciation of the intrinsic value of our key businesses. Tech and 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 and 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 extensively replaced the longstanding E3 conference. We had over 8,000 attendees in person with over twenty seven 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 two week Summer of Gaming June programming.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

The event reached over 300,000,000 fans around the world, up 91% year over year And video views were two zero two million, up 26% year over year. Social impressions were up 42% year over year at three sixty seven 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 and 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 and Wellness offerings both continue to be very strong.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

At the same time, our consumer health and wellness businesses, especially Luz It! Have strong momentum and we have seized the opportunity to sell Luz 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 five 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

All of this coupled with revenue growth for Mekahau resulted in a terrific quarter for the business. Cybersecurity and 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 Viper Integrated Email Security, a significant leap forward in our enterprise grade cloud based email security designed for small and medium businesses.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

Viper IES was designed to integrate seamlessly with Microsoft three sixty five 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 email 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

In our Health and 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 three and a half times 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 individuals 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 three acquisitions we consummated in Q2, I was particularly pleased to see two tuck in acquisitions in our Cybersecurity and Martech segment. One that strengthens our email deliverability services and the other enhances our email archiving offering. The third was an acquisition of the Well plus Good brand and content library for our Health and Wellness segment, which we've already migrated onto the SCIM 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 and 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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

Bret Richter
Bret Richter
CFO at Ziff Davis

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

Bret Richter
Bret Richter
CFO at Ziff Davis

Q2 twenty twenty five revenues were $352,200,000 as compared with revenues of $320,800,000 for the prior year period, reflecting growth of nearly 10%. Q2 twenty twenty five adjusted EBITDA was $107,700,000 as compared with $96,300,000 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 2024, reflecting growth of more than 5%. This increase reflects higher adjusted EBITDA and lower fully diluted shares outstanding.

Bret Richter
Bret Richter
CFO at Ziff Davis

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 twenty twenty five 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 and Entertainment, Health and Wellness and Connectivity segments. Certain brands within Technology and Shopping and cybersecurity and Martech contributed to organic revenue growth as well. We are very pleased with these results and the progress we have made through the 2025.

Bret Richter
Bret Richter
CFO at Ziff Davis

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 five reflects performance summaries for our two primary sources of revenue, advertising and performance marketing and subscription and licensing. Both of these revenue sources grew significantly in the 2025. Q2 twenty twenty five advertising and performance marketing grew 15.5% as compared with the prior year period, while subscription and licensing revenues grew by 5%. Q2 twenty twenty five other revenues declined by $2,200,000 year over year, primarily reflecting a decline in the contribution from our Hungable Games publishing business.

Bret Richter
Bret Richter
CFO at Ziff Davis

Slides six through 10 reflect the Q2 financial results of each of our reportable segments, which Vivek discussed in some detail already. But again, four of our five segments grew revenue in Q2 twenty twenty five, while Cybersecurity and Martech's revenue declined by less than 1% as compared with the prior year period. All five 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 twenty twenty five, we had $457,000,000 of cash and cash equivalents and $140,000,000 of long term investments.

Bret Richter
Bret Richter
CFO at Ziff Davis

We also have significant leverage capacity on both a gross and net leverage basis. As of 06/30/2025, gross leverage was 1.7 times trailing twelve months adjusted EBITDA and our net leverage was 0.8 times and 0.5 times including the value of our financial investments. During the second quarter, we closed three small acquisitions to expand the product portfolios of our health and wellness and cybersecurity and 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 2025, we deployed more than $50,000,000 of cash for acquisitions.

Bret Richter
Bret Richter
CFO at Ziff Davis

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 1,400,000.0 Ziff Davis shares. And since 06/30/2024, we deployed more than $170,000,000 and repurchased more than 4,000,000 Ziff Davis shares or approximately 10% of our shares outstanding. We have more than 4,000,000 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 intrinsic value of our underlying businesses.

Bret Richter
Bret Richter
CFO at Ziff Davis

As a result, while we will continue to ensure that we have ample capital to support our M and A program, we plan to continue to repurchase shares of our common stock. Turning to Slide 13. We are reaffirming the fiscal year twenty twenty five guidance range that we presented in February 2025. We have had a solid 2025 and as we discussed significant second quarter growth. Our guidance range is broad and has a top end that reflects fiscal year twenty twenty five projected results that imply more than 7% revenue growth, nearly 10% adjusted EBITDA growth and 10% adjusted EPS growth as compared with fiscal year twenty twenty four.

Bret Richter
Bret Richter
CFO at Ziff Davis

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 twenty twenty five, 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.

Bret Richter
Bret Richter
CFO at Ziff Davis

We expect our Health and 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 twenty twenty five free cash flow was $26,900,000 7.5% higher than the prior year period. As of the end of Q2 twenty twenty five, trailing twelve months free cash flow was $233,000,000 nearly 27 percent higher than the prior trailing twelve month period.

Bret Richter
Bret Richter
CFO at Ziff Davis

Our Q2 twenty twenty five financial results were robust. They reflect a 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 five 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 2025, we plan to use our balance sheet to continue to support our M and A program and we expect to continue to purchase our stock at its current depressed trading level.

Bret Richter
Bret Richter
CFO at Ziff Davis

Importantly, we remain committed to identifying and pursuing all opportunities that we believe offer 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

Thank you. We will now be conducting a question and answer session. And the first question today is coming from Sean Patel from Susquehanna. Your line is live. Please go ahead.

Shyam Patil
Senior Equity Analyst at Susquehanna

Hey, guys. Nice quarter. I had one question, 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? Thank you.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 five segments. So as I noted, four of them collectively grew 13%. But unpacking that, we've got three of the segments growing double digits, one high single digit.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

And the one that didn't grow, Cyber and 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 that we have a pharma commercialization and and consumer health platform that's growing double digits.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

That's the Health and 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 and 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, you know, we've got an intent driven tech and shopping portfolio, which has, you know, got great EBITDA growth as well.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

And so it can I know at times, it can feel like a lot, but I do think that if 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 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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.

Shyam Patil
Senior Equity Analyst at Susquehanna

Great. Thanks.

Operator

Thank you. Thank you. Your next question is coming from Cory Carpenter from JPMorgan. Cory, your line is live. Please go ahead.

Cory Carpenter
Cory Carpenter
Internet Equity Research at JP Morgan

Thanks for the questions. I had two, I think both for you, Vivek. Maybe just to start, if you could update us on trends you're seeing broadly in in in the ad market. Last time we talked three 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.

Cory Carpenter
Cory Carpenter
Internet Equity Research at JP Morgan

Just maybe how are you thinking about sustainability of the trends you saw this quarter? Vivek, could you just remind us of how you think about the right long term growth and margin framework for the company? Yes.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

Thanks, Corey. 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 and wellness is 42% of the ad business. The shopping and tech is another 40%, but shopping is about 21%, tech is about 19%.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 fifty-fifty double digit growth and then mid-30s margin. So I don't think that's changed. I think that has been the way we've been thinking about the business for some time.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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.

Cory Carpenter
Cory Carpenter
Internet Equity Research at JP Morgan

Awesome. Thanks for the answers.

Operator

Thank you. Thank you. Your next question is coming from Ross Sandler from Barclays. Ross, your line is live. Please go ahead.

Ross Sandler
Ross Sandler
Senior Research Analyst - Internet at Barclays

Great. Yes, just had a question on the incremental EBITDA margin. So specifically, it looks like given the new segment break breakdown, which thank you very much for that, looks like tech and health, your two biggest ad revenue pools, both growing solid but had margin contraction in 2Q. So could you just unpack, you know, some of that's probably one time 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? Thank you very much.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 five 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, you know, EBITDA margin is for these segments.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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.

Operator

Brett, don't know if you No.

Bret Richter
Bret Richter
CFO at Ziff Davis

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, have mix dynamics, you have campaign dynamics, you have one off dynamics, you have investment dynamics. They could be for people, they could be 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.

Bret Richter
Bret Richter
CFO at Ziff Davis

And in any given three month period, you're going to see some variability. M and A is also a factor as we in different divisions and as we mentioned, tech and shopping, CNET, whatnot. So

Cory Carpenter
Cory Carpenter
Internet Equity Research at JP Morgan

then some up downs.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

Just overall as a company, obviously, on a year over year basis, we have seen some margin expansion in the quarter. There was one thing as I was thinking about this in Tech and 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

So that might be something there, but that's being sunset. And so that might be one small piece on the tech and shopping. But again, small piece.

Bret Richter
Bret Richter
CFO at Ziff Davis

Small piece in dollars can move you could be within about a point of margin.

Operator

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

Ygal Arounian
Ygal Arounian
Director - Internet Equity Research at Citigroup

Hey, good morning guys. I guess sorry, I may have missed that there was commentary on this, on, because I I just jumped 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, AgenTik AI or sorry. Not AgenTik AI, but, AI overviews and and search and the distribution of traffic across the open web.

Ygal Arounian
Ygal Arounian
Director - Internet Equity Research at Citigroup

And I know you guys talked before about, you know, how you're positioned there and, a lot of your traffic coming coming directly to you guys. And maybe just an update on on what you're seeing there, and and how you're feeling. And then, I guess at the same time, if you could just talk about your approach with LLMs and if that's changed at all, how you're thinking about that?

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

Yes. No, no. Thank you. So look, I'll reiterate, Ghal, what I shared last quarter, which is 35% of the company's total revenues are ads on our O and 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 now actually traffic based.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

And I think this is the most important aspect to understand. We are not a programmatic ads business. I mean, that is less than $50,000,000 of our annual revenue of 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?

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

IGN Live, the Parenting and Pregnancy Clinical Studies business, key 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, 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 and Martech, is not part of this AI search narrative at all.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

And so but at the same time, I mean, look, we wanna 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 July 1, 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. T x d.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

And the problem with robots. T x d, 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.

Ygal Arounian
Ygal Arounian
Director - Internet Equity Research at Citigroup

Okay. Great. And then, I wanna maybe follow-up on the moments of influence product. That 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. Thanks.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

Yeah. 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 and goals are, then spits out essentially the who.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 sell sold at a corporate level. Ziff Davis does not sell advertising at a corporate level. We do it within each of our verticals.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

And so within each of our selling verticals, so say health and wellness, the everyday health group, or IG enter 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 two. We're very excited about it because I think we've gotten to the point where the datasets we have leveraging AI gets us to a level of addressability and targetability that we think can be really, really compelling.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

And remember, this is all first party data. This protected, which is very important, particularly in a lot of the categories in which we operate. So we're excited.

Ygal Arounian
Ygal Arounian
Director - Internet Equity Research at Citigroup

Very helpful. Thank you.

Operator

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

Robert Coolbrith
VP - Internet Equity Research at Evercore ISI

Hi. Just wanted to ask within health and wellness, it seemed like you had a pretty notable sort of uptick in not so much spend per advertiser customer, but the participation of advertiser customers. So just wondering if there's anything you can talk through in terms of the trends and what we should maybe expect over the next several 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 is maybe up, I want to say, 14% year over year, so notable acceleration there. Thank you.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

Yes. No, thank you for the question. And I think look, I think part of why we're seeing a larger advertiser account is that while pharma is the core of what health and wellness really does do and pharma commercialization and the market is very strong, we have been looking to expand more broadly to more health and wellness brands or brands that have a health or wellness marketing component or or target. And so I think we've had success doing that. And brands like the SKIM have been really helpful in helping us expand our base.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 and wellness and longevity, that's another big driver.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

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 the SKIM, 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

Again, a pretty good market. Right? These are people who are interested in, calorie tracking and and meal logging and weight loss and fitness, and so that opens up a lot of other, interesting advertising opportunities.

Robert Coolbrith
VP - Internet Equity Research at Evercore ISI

Great. Thanks. Just a follow-up also on 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.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

That's a funny one. I'll tell you what. This is an example of creating a set of common metrics across five 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 a combination of high price point customers on the speed test intelligence side, masked 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, given to be honest with you.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

So it's not something I've even looked at. It would be something that I'd have to probably go in and, you know, do a little bit of a gathering, which we we can do and and and look at. But overall, you know, I think what it probably points to is we're seeing a lot more growth out of speed test intelligence and RootMetrics and 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, you know, is that I'm excited for.

Vivek Shah
Vivek Shah
CEO, President & Director at Ziff Davis

It's not showing up yet. It's probably more of a 2026 event, but the Wi Fi seven router refresh will be a really interesting tailwind for this business, but it's not playing out yet.

Operator

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

Bret Richter
Bret Richter
CFO at Ziff Davis

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

Operator

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.

Executives
Analysts
    • Shyam Patil
      Senior Equity Analyst at Susquehanna
    • Cory Carpenter
      Internet Equity Research at JP Morgan
    • Ross Sandler
      Senior Research Analyst - Internet at Barclays
    • Ygal Arounian
      Director - Internet Equity Research at Citigroup
    • Robert Coolbrith
      VP - Internet Equity Research at Evercore ISI
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