Ziff Davis (ZD) Q2 2025: Four Segments Grow 13%, Health and Connectivity Lead Margin Strength
Ziff Davis delivered its strongest revenue growth since 2021, with four of five segments up and margin-rich businesses driving performance. Segment-level disclosure highlighted the diversity and resilience of the model, with health and connectivity leading expansion and cybersecurity poised for a return to growth. Management’s capital allocation, product innovation, and AI integration signal a focus on durable value creation into the second half of the year.
Summary
- Segment Diversification Delivers: Four of five divisions posted growth, with health and connectivity setting the pace.
- AI and Data Leverage Expands: Proprietary AI tools and first-party data platforms are reshaping advertising and subscription models.
- Capital Deployment Remains Aggressive: Buybacks and targeted M&A reinforce management’s intrinsic value narrative.
Performance Analysis
Ziff Davis posted its highest quarterly revenue growth since 2021, with nearly 10% top-line expansion and adjusted EBITDA up almost 12% year-over-year. This performance was underpinned by broad-based segment growth, as four of five reporting units expanded, and the lone decliner—cybersecurity and MarTech—showed signs of stabilization, declining less than 1% and expected to return to growth in Q3. The health and wellness segment led all units, posting nearly 16% revenue growth and 11% EBITDA improvement, powered by pharma commercialization and a record quarter for Prime Education.
Connectivity, data-as-a-service for network benchmarking, returned to double-digit organic growth, combining strong demand for Speedtest and RootMetrics with nearly 50% EBITDA margins. Gaming and entertainment, anchored by IGN, delivered 8% revenue growth and 24% EBITDA expansion, as IGN Live replaced E3 and drove record global engagement. Tech and shopping was up over 11% in revenue, with CNET and Spiceworks driving both top-line and SaaS momentum. Subscription and licensing revenues grew 5%, while advertising and performance marketing surged 15.5% on strength in health and tech verticals.
- Health and Wellness Outperforms: Pharma and clinical studies drove segment records, with expanded advertiser participation and new direct-to-consumer strategies.
- Connectivity Margin Power: Double-digit organic growth and 50% EBITDA margins position this unit as a core profit engine.
- Ad Mix Shift Visible: Health and tech now comprise over 80% of ad revenue, with managed decline in offers brand offset by CNET and B2B stabilization.
Free cash flow increased 7.5% to $26.9 million for the quarter, and trailing twelve-month free cash flow rose nearly 27%. Management highlighted the company’s ability to sustain margin expansion amid growth, with share buybacks and M&A further supporting per-share value.
Executive Commentary
"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 deliver truly breakthrough results and also represents the fourth consecutive quarter of revenue growth for Ziff Davis."
Vivek Shah, Chief Executive Officer
"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."
Brett Richter, Chief Financial Officer
Strategic Positioning
1. Segment Transparency and Value Unlock
Management’s new five-segment reporting structure is a direct response to investor demand for clarity on business mix and intrinsic value. By unpacking growth and margin profiles at the divisional level, Ziff Davis aims to surface the sum-of-the-parts valuation potential and highlight underappreciated profit engines—especially health, connectivity, and gaming. CEO Shah explicitly encouraged investors to “peel the onion,” signaling confidence in segment-level value creation.
2. AI Integration and Product Innovation
AI is being woven into multiple business lines, driving both operational efficiency and new revenue streams. Notable examples include AI-powered customer service chatbots at RetailMeNot, AI-driven voice and photo meal logging in Lose It (health and wellness), and the Moments of Influence platform for precise audience targeting. This proprietary, privacy-protected data platform is being rolled out across verticals, with early traction in health and wellness (Halo) and plans for further expansion.
3. Capital Allocation Discipline
Buybacks and targeted M&A remain central to Ziff Davis’ capital deployment strategy. Over $170 million was spent on repurchasing 10% of shares outstanding since June 2024, with more than 4 million shares still authorized. Three Q2 acquisitions broadened offerings in cybersecurity, MarTech, and health, with a focus on durable brands and high-value verticals. Management continues to view the stock as undervalued relative to intrinsic business worth.
4. Resilience to Search and AI Disruption
Unlike many digital media peers, Ziff Davis is structurally less exposed to SEO and search volatility. Only 35% of revenues are ads on owned-and-operated web traffic, and just 40% of that is search-driven. The company is not reliant on programmatic advertising (less than $50 million annually), and much of its EBITDA comes from segments insulated from AI search disruption. Management is actively defending IP against AI scraping (OpenAI litigation) and has begun blocking AI bots at the CDN level.
5. Margin Stability and Mix Management
While some segment margin variability appeared in Q2, management attributed this to quarterly mix and small base effects, not structural cost changes. The sunset of the PC game investment business in tech and shopping should remove a drag going forward. The company reiterated its long-term target of double-digit revenue growth (roughly half organic, half inorganic) and mid-30s EBITDA margins.
Key Considerations
The quarter highlighted the breadth and resilience of Ziff Davis’ model, but also surfaced important levers and watchpoints for investors.
Key Considerations:
- Health and Wellness Momentum: Pharma commercialization and clinical studies are driving record results and expanding advertiser participation, aided by new DTC subscription and ad-supported models in Lose It.
- Connectivity as a Margin Anchor: High-margin, data-as-a-service offerings in Speedtest and RootMetrics reinforce the company’s cash flow and profit base, with APAC and EMEA growth adding geographic diversification.
- AI and Data Platform Upside: First-party, privacy-protected data platforms enable differentiated ad targeting and new monetization opportunities, with early client traction in health and more verticals to follow.
- Cybersecurity and MarTech Recovery: Segment is positioned to return to growth in Q3, with new product launches (Vypr IES) and tuck-in M&A expanding capabilities and addressable markets.
- Capital Allocation Optionality: Strong balance sheet, low leverage, and robust cash flow support continued buybacks and accretive M&A, with management signaling ongoing discipline and patience.
Risks
Key risks include ongoing volatility in digital advertising demand, especially in managed decline brands, and the potential for further disruption from AI-driven search and traffic distribution shifts. While Ziff Davis is less exposed than pure-play programmatic peers, continued litigation and evolving AI licensing dynamics introduce uncertainty. Currency fluctuations and the timing of M&A integration may also impact reported results and margin delivery.
Forward Outlook
For Q3 and Q4 2025, Ziff Davis guided to:
- At least mid-single-digit revenue growth in both quarters, with Q4 potentially stronger than Q3
- Adjusted EBITDA margins similar to 2024 levels, with stronger EBITDA growth in Q4
For full-year 2025, management reaffirmed guidance:
- More than 7% revenue growth at the top end, nearly 10% adjusted EBITDA growth, and 10% adjusted EPS growth
Management expects health and wellness and connectivity to be the largest contributors to second-half growth, with typical seasonality favoring Q4. Currency and campaign mix may impact quarterly EPS, but the outlook remains robust.
- Cybersecurity and MarTech expected to return to revenue growth in Q3
- Ongoing M&A and buybacks to continue, supported by balance sheet strength
Takeaways
Ziff Davis has re-established a double-digit growth trajectory, with segment-level transparency and AI-driven innovation strengthening its competitive position.
- Multi-Engine Growth: Health, connectivity, and gaming segments are driving both top-line and margin expansion, with diversified revenue streams reducing model risk.
- AI and Data Moats: Proprietary platforms and privacy-first data strategies are building defensible advantages in advertising and SaaS monetization.
- Capital Allocation Focus: Aggressive buybacks and disciplined M&A reinforce management’s conviction in intrinsic value, with further upside if segment-level performance persists.
Conclusion
Ziff Davis’ Q2 results validate its pivot toward higher-growth, higher-margin segments, while new disclosures and AI initiatives set the stage for continued value unlock. Investors should monitor execution in cybersecurity and MarTech, as well as the rollout of AI-powered ad solutions and further capital deployment as key drivers for the second half.
Industry Read-Through
Ziff Davis’ performance underscores the value of diversified digital models with recurring revenue, data-as-a-service, and defensible first-party data in a volatile ad and search environment. The company’s resilience to AI-driven search disruption and rapid deployment of proprietary AI tools provide a template for peers seeking to insulate margins and unlock new monetization streams. For digital media and SaaS platforms, the emphasis on segment transparency, privacy-first data, and capital discipline offers a roadmap for sustaining growth and valuation in an increasingly fragmented landscape.