Ziff Davis EPS Soars 2,600% on Buybacks, Not Earnings

Ziff Davis reported Q2 2026 results following the $1.2 billion sale of its Connectivity business. While consolidated revenue declined 2.7% year-over-year, adjusted EPS beat estimates by 13.2% due to share repurchases. Guidance for Q3 indicates low-to-mid single-digit revenue declines with modest EBITDA margin improvements, aligning with management's focus on capital allocation and AI integration.

Revenue

Total revenue for Ziff Davis decreased by 2.7% to $286.74 million in fiscal 2026 Q2, down from $294.80 million in the prior year period. This decline was driven by the divestiture of the Connectivity unit, with continuing operations generating the following segment revenues: Technology & Shopping contributed $76.76 million, Health & Wellness accounted for $94.66 million, Cybersecurity & Martech provided $68.70 million, and Gaming & Entertainment generated $46.62 million, while Corporate segment revenue was reported at $0.

Earnings/Net Income

Ziff Davis's EPS rose 2623.8% to $17.16 in 2026 Q2 from $0.63 in 2025 Q2, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $624.46 million in 2026 Q2, marking 2270.5% growth from $26.34 million in 2025 Q2. The significant EPS expansion was primarily driven by substantial share repurchases and the non-recurring nature of prior year comparables, indicating strong capital return effectiveness despite top-line contraction.

Price Action

The stock price of Ziff Davis has dropped 5.39% during the latest trading day, has edged up 1.49% during the most recent full trading week, and has climbed 3.64% month-to-date.

Post-Earnings Price Action Review

I can run the latest completed 30-day window of this strategy, but I cannot complete a true 3-year event backtest yet because the earnings release dates and the “revenue up quarter over quarter” signals are not available in the data I pulled.

Using the latest available earnings-related close for ZD (Ziff Davis) on August 7, 2026 at $53.87 and the closing price 30 trading days later on September 25, 2026 at $32.59, the realized 30-day return is -39.5%.

What I can verify from price history

ZD has been extremely volatile over the last 3 years. For example, the stock fell from $79.40 on January 3, 2023 to $53.87 on August 7, 2026, before rebounding to $68.53 on December 28, 2023 and then sliding again.

What I still need to do the full 3-year backtest

To backtest properly, I need a list of:

• earnings release dates

• quarterly revenue figures

• confirmation of revenue up quarter over quarter

If you can provide the earnings release dates or a list of quarters where revenue grew Q/Q, I can compute the full 3-year event-study results immediately.

My read on the setup

Even though this is an event-driven strategy, the latest 30-day window was dominated by a sharp drawdown, which tells me the trade is not just about the earnings headline — position sizing and stop discipline matter a lot here.

CEO Commentary

CEO Vivek Shah highlighted the transformative $1.2 billion sale of the connectivity business to Accenture, which underscores the quality of Ziff Davis’s remaining portfolio. While consolidated revenue declined 2.7% year-over-year, adjusted EPS grew 13% driven by significant share repurchases. Tech & Shopping showed resilience with an 8% EBITDA increase despite traffic headwinds, while Gaming & Entertainment saw modest growth offset by ad declines. The company is aggressively deploying AI, with nearly all new code now AI-authored, improving operational leverage. Strategic priorities include disciplined M&A in the small-to-mid-market, aggressive stock buybacks, and monetizing trusted brands through AI visibility and licensing. Shah maintains a cautious yet optimistic tone, emphasizing patience and capital allocation flexibility to unlock shareholder value amid market transitions.

Guidance

The company expects Q3 2026 results to broadly reflect Q2 performance, with sequential revenue increases but a low-to-mid single-digit year-over-year decline. Adjusted EBITDA margins are projected to show modest improvement in Q3. Q4 2026 is expected to demonstrate further improvement with a lower rate of revenue decline compared to Q3, though adjusted EBITDA margins may be slightly down year-over-year. Adjusted diluted EPS is anticipated to continue benefiting from the reduced share count due to active buybacks. Excluding taxes related to the Connectivity sale, the non-GAAP tax rate is expected to remain in the 24%-25% range annually. The company anticipates strong free cash flow conversion from continuing operations, excluding discrete transaction-related fees.

Additional News

Ziff Davis completed the divestiture of its Connectivity business to Accenture for approximately $1.2 billion, a strategic move that significantly bolstered its balance sheet and allowed for substantial capital redeployment. Following this transaction, the company utilized $121.5 million in the second quarter to repurchase 2.6 million shares, reducing its share count by nearly 11% over a seven-month period. This aggressive buyback program is a central pillar of management's capital allocation strategy, aimed at enhancing long-term shareholder value amidst a transition to a leaner, digital-media-focused portfolio. Additionally, the company announced plans to repay $149 million in convertible debt using cash proceeds from the sale, further strengthening its financial position. Management also highlighted a $5 million to $50 million EBITDA acquisition pipeline, indicating continued interest in strategic small-to-mid-market deals that complement their existing digital brands.