Ziff Davis (ZD) 8 Aug 24 2024 Q2 Earnings call transcript

Ziff Davis, a leading digital media company, recently held an earnings call for the second quarter of 2024. The call, led by CEO Vivek Shah and CFO Bret Richter, provided valuable insights into the company's financial performance, strategic initiatives, and future outlook. Here are some key takeaways from the call.

Financial Performance

The company reported a 1.6% decline in total revenues year-over-year, with the most significant changes occurring in the Digital Media and Cybersecurity and Martech segments. The Digital Media segment was flat, while the Cybersecurity and Martech segment experienced a 5.8% decline. However, the company remains confident in its ability to grow in the second half of 2024, with expectations of accelerating growth in gaming, connectivity, and health and wellness.

Strategic Initiatives

Ziff Davis has been actively acquiring assets to strengthen its position in core verticals and expand its offerings. The recent acquisition of Gamer Network and the pending acquisition of CNET are part of this strategy. These deals are expected to enhance existing platforms and compound growth, as they include powerful, established brands and further the company's leadership position in their respective categories.

Capital Allocation

The company has been strategic in its capital allocation, with an average of over $300 million per year deployed on acquisitions since 2012. However, the company has been less active in recent years due to the spin-off of its Consensus business and the cooling M&A market. Now, with a renewed focus on acquisitions and share buybacks, the company aims to deploy capital effectively to enhance bottom-line growth.

Market Outlook and Challenges

The earnings call highlighted challenges in the tech advertising market, which has been challenging for the better part of the past two years. The company has seen growth in this area, but it has not been sustained. Additionally, the company mentioned concerns around the impact of AI on search and competition in the market. However, the company remains optimistic about the future, with a focus on improving organic growth, expanding margins, and leveraging AI to enhance user experiences and drive revenue.

ESG Efforts

Ziff Davis is actively working to reduce its carbon footprint and promote sustainability. The company has partnered with suppliers to meet its 2030 science-based emissions reduction targets and has disclosed its ESG efforts to various assessments. These efforts have been recognized with an AA rating from MSCI and a Sustainability Leadership Award from the Business Intelligence Group.

Conclusion

Ziff Davis' earnings call provided a comprehensive overview of the company's financial performance, strategic initiatives, and future outlook. Despite some challenges, the company remains confident in its ability to drive growth and create value for shareholders. The acquisition of Gamer Network and the pending acquisition of CNET are expected to strengthen the company's position in key verticals and enhance its leadership in digital media. With a focus on strategic capital allocation and sustainability, Ziff Davis is well-positioned for the future.