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Ziff Davis (ZD) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Communication Services· Aug 7, 2026

Source: earnings call transcript

Executive summary

Ziff Davis Q2 FY26 — Strategic Divestiture and Accelerated Share Repurchases

Ziff Davis completed the strategic divestiture of its connectivity business, bolstering its cash position and enabling accelerated share repurchases. The company is actively integrating AI into its product development, driving efficiency gains despite revenue and EBITDA declines in the quarter. Management remains focused on disciplined capital allocation and exploring further monetization opportunities.

Highlights

5

  • Completed sale of connectivity business for $1.2 billion, reflecting a 14.5x multiple of trailing 12 months adjusted EBITDA less CapEx.

  • Repurchased 4.5 million shares year-to-date 2026, reducing shares outstanding by nearly 11%.

  • Adjusted diluted EPS grew 13% year-over-year.

  • Free cash flow was $54 million, up 100% from Q2 2025.

  • AI-authored code share roughly doubled, now majority of new code, leading to 24% more code shipped on lower engineering headcount.

Concerns

5

  • Consolidated revenue declined 2.7% year-over-year.

  • Adjusted EBITDA declined 3.7% year-over-year.

  • Tech & Shopping revenues declined 5% year-over-year.

  • Health & Wellness revenues were down nearly 5% year-over-year due to lower HCP advertising.

  • IGN ad revenue declined due to the current state of the video game market and title slate.

Guidance & targets

CategoryTargetConfidence
Q3 2026 Revenue (continuing operations)
increase sequentially but decline low to mid-single digits year-over-year
high materiality
High
Q3 2026 Adjusted EBITDA margin percentage
modest improvement as compared with this quarter's margin
medium materiality
High
Q4 2026 Revenue (continuing operations)
show improvement as compared with Q3 with a lower rate of revenue decline
high materiality
High
Q4 2026 Adjusted EBITDA margin
slightly down year-over-year
medium materiality
High
Adjusted diluted EPS
continue to reflect the benefit of the year-over-year reduction in shares outstanding
high materiality
High
Non-GAAP tax rate
24% to 25% range on an annual basis
medium materiality
High
AI-authored code share
nearly all of our code authored by AI
high materiality
High
Cash tax payments for connectivity sale
satisfy the vast majority of our cash tax payments by the end of the first quarter of 2027
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Tech & Shopping
Revenues declined 5% year-over-year, a significant improvement from prior quarters. Adjusted EBITDA rose more than 8%, reflecting lower expenses from cost savings measures. Audiences are growing through off-platform channels, and meaningful affiliate commissions are generated via social channels. CNET and PC Mag are highly cited in AI visibility reports.
—-5%—Adjusted EBITDA rose more than 8%
Gaming & Entertainment
Revenues grew by almost 1% year-over-year, driven by a record quarter at Humble Bundle, offsetting ad revenue declines at IGN due to the video game market and title slate. Adjusted EBITDA fell slightly due to higher marketing and content costs for Humble Bundle. IGN's game health tools continue to grow in popularity.
Humble Bundle: record quarterMAP Genie traffic: up 30% YoYMaxroll traffic: up 11% YoYIGN Live attendees: >10,000IGN Live content reach: ~$300M audience
—<1%—Adjusted EBITDA fell slightly
Health & Wellness
Revenues were down nearly 5% and adjusted EBITDA down nearly 10% year-over-year, primarily due to lower HCP advertising revenue at MedPage Today. This was partially offset by strength in consumer DTC advertising, benefiting from GLP-1 prescriptions. MedPage is expanding distribution into EHR systems, and the hospital media network expanded with UPMC.
—-5%sequential growth over Q1Adjusted EBITDA down nearly 10%
Cybersecurity & Martech
Revenues and adjusted EBITDA both grew nearly 1% year-over-year. This was led by strong performance in consumer cybersecurity, with IPVanish growing for the fifth straight quarter. SMTP.com delivered double-digit growth, and Symantec Labs, acquired in Q3 2025, has grown steadily.
IPVanish growth: 5th straight quarter of YoY growthSMTP.com growth: double-digit growthSymantec Labs performance: grown steadily since Q3 2025
—<1%—Adjusted EBITDA grew nearly 1%

Product announcements

ProductTypeDetails
GLP1 supportupdate
MedPage Today newsletter productexpansion

Deals & partnerships

Accenture Sale of connectivity business $1.2B

Transformative transaction, concrete illustration of the quality of underlying businesses.

American Thoracic Society and American Academy of Family Physicians Exclusive association job board partnerships for Healthy Careers

Strengthened association partnership at Healthy Careers, a leading career health care platform.

University of Pittsburgh Medical Center Expansion of hospital media network

Added to the hospital media network, where Ziff Davis serves as the exclusive digital advertising partner.

Symantec Labs Acquisition of performance-based customer acquisition business

Acquired in Q3 of 2025, showing strong first-year performance.

Multiple (unnamed) Two small acquisitions $9.2M

Deployed $9.2 million year-to-date 2026 to support M&A activities, including two small acquisitions during Q2 2026.

Risks & headwinds

Headwinds in traditional search traffic ongoing

Tech & Shopping revenues declined 5% YoY; AIOs now in 50% of relevant Google queries (up from 36%)

Mitigation:Growing audiences through off-platform channels (social, native apps, email, video); leveraging brand credibility for AI content citations.

Lower HCP advertising revenue Q2 FY26, but sequential growth expected

Health & Wellness revenues down nearly 5% YoY; Adjusted EBITDA down nearly 10% YoY

Mitigation:Expanding MedPage distribution into EHR systems; strengthening association partnerships; benefiting from consumer DTC advertising related to GLP-1s.

IGN ad revenue declines due to video game market Q2 FY26

Gaming & Entertainment Adjusted EBITDA fell slightly

Mitigation:Anticipating recovery with major game releases (e.g., GTA 6 in November 2026); strong performance of Humble Bundle and game health tools (MAP Genie, Maxroll).

Structural challenge in HCP ad market ongoing

Large pharma clients reduced spend and shifted to lower-cost, AI-based platforms

Mitigation:Expanding distribution, focusing on valuable content that can feed new engines, leveraging consumer-side strength.

AI content licensing litigation ongoing

Litigation with OpenAI is proceeding

Mitigation:Maintaining a position to establish fair compensation for foundational training, preferring patience over quick, compromising agreements.

What to watch in Q3 FY26

MedPage Today sequential growth

through the balance of 2026
Current grew sequentially over Q1
Target continue sequential growth

Why it matters

Indicates recovery in HCP advertising revenue despite structural headwinds.

However, we grew sequentially over Q1 and expect sequential growth to continue through the balance of 2026.

Find out whether ZD delivers this. Inve re-checks your case every morning.

Q&A highlights

What is the demand environment for HCP advertising, especially with AI platforms, and how is MedPage adapting? Also, what are the expectations for Gaming & Entertainment in the back half of the year, considering upcoming blockbuster titles?

HCP advertising faces structural challenges from pharma shifting spend to lower-cost, AI-based platforms, but MedPage is seeing sequential growth and expanding distribution via EHRs. The consumer DTC side is strong due to GLP-1s. Gaming is a 'hits-driven' business, and major releases like GTA 6 in November are expected to drive recovery for IGN, while Humble Bundle continues strong performance with new leadership and faster feature rollouts.

“The structural challenge is also real, right? We have some large pharma clients who have reduced their overall spend levels with us and have shifted towards some lower-cost platforms. Many of those are actually AI-based platforms.”

asked by Robert Coolbrith · answered by Vivek Shah

2 min read 6 chapters

Detailed narrative

Strategic Divestiture and Capital Allocation

Ziff Davis completed the sale of its connectivity business to Accenture for $1.2 billion, representing a 14.5x multiple of trailing 12 months adjusted EBITDA less CapEx. This transaction significantly strengthened the company's financial position, leading to a substantial net cash balance of $734 million. Management deployed over $200 million year-to-date 2026 to repurchase 4.5 million shares, reducing outstanding shares by nearly 11%, and plans to repay $149 million of convertible debt maturing in November 2026. The company remains open to further monetization opportunities and disciplined M&A.

AI Integration and Operational Efficiency

AI has become central to Ziff Davis's product development, with the share of AI-authored code roughly doubling in Q2 and now constituting the majority of new code. The company is on track for nearly all code to be AI-authored by year-end 2026, shifting the product workforce focus to architecture and innovation. This has already resulted in a 24% increase in code shipped in Q2 compared to Q1, with lower engineering headcount and stable quality, demonstrating significant operational efficiency gains.

Segment Performance Highlights

Consolidated revenue declined 2.7% year-over-year, with adjusted EBITDA down 3.7%. Tech & Shopping revenue declined 5% but showed significant improvement from prior quarters, with adjusted EBITDA rising over 8%. Gaming & Entertainment revenue grew nearly 1%, driven by Humble Bundle, while IGN faced ad revenue declines. Health & Wellness revenue was down nearly 5% due to HCP advertising, offset by strength in consumer DTC. Cybersecurity & Martech saw nearly 1% growth in both revenue and adjusted EBITDA, led by consumer cybersecurity and SMTP.com.

HCP Advertising Headwinds and Mitigation

MedPage Today experienced a year-over-year decline in HCP advertising revenue due to large pharma clients reducing spend and shifting to lower-cost, often AI-based, platforms. However, MedPage grew sequentially over Q1 and expects continued sequential growth. Mitigation efforts include expanding distribution through EHR system integration and strengthening association partnerships for Healthy Careers. The consumer DTC advertising and subscription businesses (Lose It!) are benefiting from GLP-1 prescription growth.

Gaming Market Dynamics and Blockbuster Releases

IGN's ad revenue was impacted by the current state of the video game market and a lighter slate of titles. Management anticipates a recovery with major releases like GTA 6, slated for November 2026, which historically drive significant activity. The Humble Bundle business continues to perform strongly, driven by new leadership and enhanced content offerings. IGN Live celebrated its third year with over 10,000 attendees and a content reach of nearly $300 million.

Search Traffic Headwinds and Off-Platform Growth

The company continues to face declines in traditional search referral traffic, with AI Overviews (AIOs) now present in 50% of relevant Google queries. To counter this, Ziff Davis is growing audiences through off-platform channels like Instagram, Facebook, TikTok, YouTube, CTV, and events. Meaningful affiliate commissions are being generated directly through social channels. Trusted brands like CNET and PC Mag are highlighted in AI visibility reports, attracting marketers seeking high-quality, authoritative editorial content.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.