ZIFF DAVIS, INC. (ZD Q4 FY2024 earnings call

• Vivek Shah introduced the new segment reporting structure, transitioning from 2 to 5 reportable segments: Tech & Shopping, Gaming & Entertainment, Health & Wellness, Connectivity, and Cybersecurity and Martech.
• Discussed AI initiatives, noting AI-powered features in Lose IT! and Health eCareers, and addressed DEI practices as about fairness, equal opportunity, and belonging.
• Bret Richter reviewed financial results for Q4 2024 and FY 2024, including revenue growth of 5.9% in Q4 and 2.8% for FY 2024, adjusted EBITDA growth, and adjusted diluted EPS growth.
• Addressed challenges in Q4 2024, such as underperformance in Humble Games Publishing and Connectivity, and indirect tax impacts on revenue.
• Outlined capital allocation activities, including M&A deployments and share repurchases, and discussed the balance sheet strength.

Tech & Shopping: In 2021, revenue spiked 55% due to M&A and COVID, then declined 25% over 2022-2023, but returned to nearly 10% growth in 2024. Gaming & Entertainment: Mid-single-digit growth for years, smallest segment but with balanced monetization and potential to scale via acquisitions. Health & Wellness: Long a fast grower, had challenges in 2024 but expects return to robust growth, with elements like Trusted Care Access, Lose IT! app, and Pharma Ad business. Connectivity: Most exciting business, reorganized in 2024, had Q4 issues with historical data sales not materializing, but expected to be a growth engine. Cybersecurity and Martech: Revenue declined ~3% in 2024 but improved from 2023, maintained 35% EBITDA margin, expected to return to growth in H2 2025.

• 2025 guidance: Revenue growth midpoint 5%, adjusted EBITDA midpoint 6%, adjusted diluted EPS midpoint.
• Expect improved performance from Tech & Shopping and Health & Wellness, continued growth from Gaming & Entertainment, significant growth from Connectivity, and improvement in Cybersecurity and Martech.
• Muted Q1 2025 performance anticipated, with stronger growth in the second half of 2025, and adjusted EBITDA margin expected to be ~35.5% midpoint for the year.

• Indirect tax audit in Q4 2024 led to a contra-revenue item impacting revenue and adjusted EBITDA.
• Humble Games Publishing fell short of Q4 expectations due to new releases moving to 2025 and underperformance of some titles.
• Connectivity did not see the expected large deal activity in Q4, including absence of historical data sales.
• Macro-economic factors and seasonality posing potential impacts on performance.

Q: About the macro environment and ad growth, how are categories like tech, gaming, health performing?

A: Vivek noted tech ad growth with CNET's help, Gaming & Entertainment has good growth, Health & Wellness expects to recover from challenges.

Q: On capital allocation, thoughts on M&A and share buybacks?

A: Bret Richter said 2024 was active in M&A with $225M deployed, pipeline is active, and share repurchases are balanced with other capital allocation.

Q: On Health & Wellness, impact of biopharma environment and M&A opportunities?

A: Vivek stated biopharma DTC concerns are not material, and there are opportunities for tuck-in M&A in app-based, consumer-focused areas.

Q: On Ookla, impact of historical data sales not materializing?

A: Vivek explained reorganization in Connectivity led to some Q4 disruptions but expects it to be a growth engine.

Q: On CNET integration, progress and impact on ad sales?

A: Vivek said integration is ahead of plan, combined sales and marketing teams, and there's editorial collaboration, realizing expected synergies.