Ziff Davis, Inc.

Good day, ladies and gentlemen, and welcome to the ZIF Davis third quarter 2025 earnings conference call. My name is Tom, and I will be the operator assisting you today. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. On this call will be Vivek Shah, CEO of Ziff Davis, and Brett Richter, Chief Financial Officer of Ziff Davis. I will now turn the call over to Brett Richter, Chief Financial Officer of Ziff Davis. Thank you. You may begin.

Thank you. Good morning, everyone. and welcome to the Zip Davis Investor Conference Call for Q3 2025. As the operator mentioned, I am Brett Richter, Chief Financial Officer of Zip Davis, and I am joined by our Chief Executive Officer, Vivek Shah. A presentation is available for today's call. A copy of this presentation, as well as our earnings release, is available on our website, www.zipdavis.com. In addition, you can access the webcast from this site. When you launch the webcast, there is a button on the viewer on the right-hand side, which will allow you to expand the slides. After completing the formal presentation, we'll be conducting a Q&A. The operator will instruct you at that time regarding the procedures for asking questions. In addition, you can email questions to investor at zipdavis.com. Before we begin our prepared remarks, allow me to read the safe harbor language. As you know, this call and the webcast will include forward-looking statements. Such statements may involve risks and uncertainties that could cause actual results to differ materially from the anticipated results. Some of those risks and uncertainties include, but are not limited to, the risk factors that we have disclosed in our SEC filings, including our 10 filings, recent 10 filings, various proxy statements and AK filings, as well as additional risks and uncertainties that we have included as part of the slideshow for the webcast. We refer you to discussions in those documents regarding safe harbor language, as well as forward-looking statements. In addition, following our business outlook slides are our supplemental materials, including reconciliation statements for non-GAAP measures to their nearest GAAP equivalent. Now let me turn the call over to Vivek for his remarks.

Vivek Murthy Thank you, Brett, and good morning, everyone. In our third quarter earnings release, we announced that Ziff Davis has engaged outside advisors to help us evaluate potential opportunities to unlock value for our shareholders. I'd like to provide some additional context to this disclosure. At the end of fiscal year 2024, we significantly enhanced our segment-level reporting. going from two to five reportable segments. One of our goals with this change was to provide investors with a more comprehensive understanding of the financial characteristics of each of our divisions, and we believe that this reporting has resulted in greater insight into the performance and intrinsic value of these businesses. We've been encouraged by the reaction to this reporting change, including the engagement from public market investors and analysts some of whom have used the enhanced disclosures to adopt a some-of-the-parts approach to the valuation of Ziff Davis. We applaud those efforts because we believe they do reveal a meaningful discount in our current market cap relative to the intrinsic value of the company. At the same time, we have also received interest from both strategic and private equity investors in certain of our businesses presumably doing their own analyses of our various components. In order to properly evaluate this interest, we have engaged outside advisors to assist us in assessing how certain potential transactions could unlock greater shareholder value. While no final decisions have been made to date, our focus remains on maximizing value for all shareholders. There is no assurance that this evaluation will result in any transactions, and we are very willing to continue to operate with the current business structure, which is profitable, growing, and generates strong free cash flow. It's worth noting that proactively evaluating and acting on opportunities to create value for shareholders is embedded in our company's culture and history. You'll recall that in 2021, we undertook a similar process that resulted in the spinoff of our consensus business as an independent public company, demonstrating our willingness to take action when it serves our shareholders' interests and unlocking significant stakeholder value at that time. In that transaction, ConsenSys' post-spinoff enterprise value was close to $2 billion. This was a very positive outcome for shareholders and employees of both companies. If and when there are material developments related to these initiatives, we look forward to providing updates then, and we will, of course, continue to be intently focused on executing against our operating plans. Turning now to our performance in the third quarter, we grew revenues nearly 3%, marking a fifth consecutive quarter of revenue growth. While our adjusted EBITDA fell slightly year over we grew adjusted diluted EPS by 7% as we increased our share buybacks to capitalize on the current valuation disconnect in the price of SIF Davis stock. Three of our five reportable segments grew revenues in Q3, including a return to growth for our cybersecurity and MarTech segment. So let me share some observations about each of our five segments. Tech and shopping revenue dropped 2% in Q3, with adjusted EBITDA down 12%. This was primarily driven by the continued wind down of our game publishing activities, which had a negative year-over-year revenue swing of $6.9 million. As you'll recall, we previously announced that we are no longer investing in new game titles, but we have a slate of pre-existing projects, which will launch over the next four quarters. Excluding game publishing, the tech and shopping segment grew in both revenues and adjusted EBITDA, led by CNET, which delivered strong year-over-year growth in licensing driven by new awards, expanded video capabilities and sponsorships, and the continued rollout of our Best Buy partnership that began implementation in Q3 of 2024. Gaming and entertainment revenues were about 4% lower year-over-year, with adjusted EBITDA growth of nearly 3%. Gaming Entertainment's revenues can be lumpy due to the timing of title releases. Year-to-date revenues are up approximately 2%, and we are on track for revenue growth in the seasonally important fourth quarter. Q3 was Humble Bundle's best quarter of the year and was the second highest revenue quarter for the business in the last five years. Humble Bundle subscription revenues were up 5% year-over-year. Events continue to be a large focus for IGN Entertainment for audiences and advertisers alike. IGN was back at San Diego Comic-Con in July and was once again the studio partner for Gamescom, the world's biggest gaming show held in Germany every August. Health and wellness' growth accelerated in Q3 with 13% year-over-year revenue growth and 18% year-over-year adjusted EBITDA growth, both representing high watermarks for the division in the third quarter. The growth was balanced across subscription and display and performance marketing revenue. We continue to deliver positive results with our pharma commercialization programs while supporting health-seeking consumers with our digital health and wellness solutions like our Lose It app, which saw strong subscription growth this quarter. Since we acquired Everyday Health, the division has evolved into a multifaceted solutions provider to the pharma commercialization, digital health and wellness, and provider solutions markets. Participation across these verticals is particularly strategic in a world where the line between traditional healthcare and consumer-driven self-care continues to blur. Our ability to deliver positive, tangible results for pharma with both patients and providers continues to place us in a strong competitive position. The connectivity division delivered 2 percent year-over-year revenue growth as several deals shifted into the fourth quarter. Year-to-date, revenues at connectivity are up 7 percent, and we are confident that revenue growth will accelerate in Q4, not just from timing benefits, but underlying strength in the pipeline and the introduction of new products. Continuing our efforts to leverage our platform, brand, and distribution to launch new offerings, the first new product is Speedtest Certified, which launched in September and provides a highly localized Wi-Fi certification program to target enterprise verticals under the Speedtest brand. Speedtest Certified is off to a promising start with strong global demand, including the certification of our first customer in October. The second new product, which we are planning to launch in Q4, leverages Ekahau's core capabilities and is designed for rapid network validation, diagnostics, troubleshooting, and continuous network connectivity testing. Our initial target customers are internet service provider technicians and IT organizations, from which we have already received very promising expressions of interest. Cybersecurity and MarTech revenue grew 2% in Q3, Consistent with our forecast, this segment would return to growth in the quarter. Growth was driven by strong performance in cybersecurity, in particular from consumer VPN and consumer cloud backup. I highlighted the momentum in VPN on our Q2 call, and it's great to see the turnaround in this business. In MarTech, we completed the small but exciting acquisition of Symantec Labs, performance-based customer acquisition platform focused on the SaaS vertical. Symantec is a great complement to the customer generation capabilities we have elsewhere in our MarTech portfolio, as well as in our tech and shopping segment. Across the company, we are leveraging AI to enhance our products and improve operational efficiency. As mentioned on the last call, we developed an AI platform to refine how we serve our advertisers. This platform creates precise audience segments powered by billions of real-time signals from across our portfolio, translating this proprietary data into what we call moment of influence solutions. This quarter, we officially launched two commercial applications of this proprietary platform. In health and wellness, we launched Halo, which activates our deep first party data to identify and target high intent audiences, maximizing campaign ROI. It is operational, and the early client response has been strong. In gaming and entertainment, we introduced Imagine, a first of its kind cognitive AI platform that combines cultural intelligence with predictive audience modeling to help brands understand forecasts and reach entertainment consumers in real time. We're currently in private beta with select strategic partners with a full commercial rollout plan for early 2026, aligning with IGN's 30th anniversary. We're also deploying AI to drive efficiency. In our shopping business, for example, 80% of all users submitted coupon codes are now processed automatically with AI. one of many workflow optimizations being implemented company-wide. On capital allocation, we are in a strong position with substantial cash to continue buying back stock at attractive levels and significant leverage capability. Even as we explore potential opportunities to unlock the intrinsic value in our businesses, which we believe is not appropriately reflected in our per share value, we are still committed to an acquisition program that generates attractive cash-on-cash returns for our shareholders. This is a consistent strategy for us. Following the consensus spinoff in late 2021, we closed six M&A transactions in fiscal 2022. And with that, let me hand the call back to Brett.