ZIFF DAVIS, INC. AND SUBSIDIARIES QUARTERLY REPORT
Ziff Davis, Inc. reported its quarterly financial results for the period ended March 31, 2025. The company’s revenue increased by 12% year-over-year to $123.4 million, driven by growth in its digital media and e-commerce businesses. Net income rose to $14.1 million, or $0.33 per diluted share, compared to a net loss of $2.1 million, or $0.05 per diluted share, in the same period last year. The company’s operating expenses increased by 10% to $109.3 million, primarily due to higher personnel and marketing costs. As of March 31, 2025, Ziff Davis had cash and cash equivalents of $143.8 million and total debt of $25.6 million. The company’s shares outstanding as of May 5, 2025, were 42,087,573.
Overview
Ziff Davis, Inc. is a vertically focused digital media and internet company with leading brands in technology, shopping, gaming and entertainment, health and wellness, connectivity, cybersecurity, and marketing technology. The company has five reportable segments: Technology & Shopping, Gaming & Entertainment, Health & Wellness, Connectivity, and Cybersecurity & Martech.
Ziff Davis generates revenue primarily through advertising and performance marketing, as well as subscription and licensing services. Advertising and performance marketing revenue comes from the delivery of advertising, marketing, and production services. Subscription and licensing revenue is earned through granting access to data products and services, usage-based fees, and reselling third-party solutions.
Financial Performance
For the three months ended March 31, 2025, Ziff Davis reported total revenues of $328.6 million, an increase of 4.5% compared to the prior year period. This was driven by a $19.2 million increase in advertising and performance marketing revenue, partially offset by a $3.0 million decrease in subscription and licensing revenue.
| Revenues (in thousands) | Q1 2025 | Q1 2024 | % Change |
|---|---|---|---|
| Advertising and Performance Marketing | $174,240 | $155,078 | 12.4% |
| Subscription and Licensing | $145,828 | $148,919 | -2.0% |
| Other | $8,568 | $10,488 | -18.3% |
| Total Revenues | $328,636 | $314,485 | 4.5% |
Direct costs, which include costs associated with revenue generation, increased 2.9% to $47.2 million. Sales and marketing expenses increased 9.1% to $127.7 million, primarily due to higher employee costs and partner payments. Research, development, and engineering costs decreased 10.7% to $15.9 million. General, administrative, and other related costs decreased 5.3% to $46.9 million.
Depreciation and amortization expense increased 15.2% to $55.8 million, reflecting the impact of recent acquisitions and capitalized software.
Non-operating expenses decreased 45.4% to $8.9 million, driven by lower interest expense and the absence of losses on investments and the sale of businesses compared to the prior year period.
The effective tax rate decreased from 42.2% in Q1 2024 to 32.8% in Q1 2025, primarily due to the absence of a discrete tax charge related to a valuation allowance on capital loss carryforwards.
Overall, Ziff Davis reported net income of $17.6 million for the first quarter of 2025, compared to $11.2 million in the prior year period.
Segment Performance
Technology & Shopping Revenues in the Technology & Shopping segment increased 17.9% to $81.7 million, driven by a $13.6 million increase in advertising and performance marketing. Operating loss decreased 40.3% to $4.0 million.
Gaming & Entertainment Revenues in the Gaming & Entertainment segment increased 3.8% to $38.0 million, primarily due to higher advertising and performance marketing. Operating income decreased 16.6% to $8.8 million.
Health & Wellness Revenues in the Health & Wellness segment increased 7.3% to $85.8 million, with growth in both advertising and performance marketing as well as subscription and licensing. Operating income nearly doubled to $17.0 million.
Connectivity Revenues in the Connectivity segment increased 5.0% to $55.8 million, driven by higher subscription and licensing. Operating income remained relatively flat at $19.5 million.
Cybersecurity & Martech Revenues in the Cybersecurity & Martech segment decreased 10.8% to $67.3 million, primarily due to lower subscription and licensing. Operating income decreased 41.7% to $11.3 million.
Key Metrics
Ziff Davis uses several key metrics to assess the performance of its business segments:
Advertising and Performance Marketing
- Net advertising and performance marketing revenue retention: Measures the ability to retain spend from existing advertisers year-over-year. This ranged from 90.0% to 94.9% across the relevant segments.
- Number of customers: Excludes customers generating less than $2,500 per quarter. This ranged from 311 to 703 customers across the relevant segments.
- Quarterly revenue per customer: Ranged from $78,362 to $138,701 across the relevant segments.
Subscription and Licensing
- Number of customers: Ranged from 25,000 to 1,820,000 across the relevant segments.
- Average quarterly revenue per customer: Ranged from $7.20 to $2,013 across the relevant segments.
These metrics provide insights into customer retention, growth, and monetization within Ziff Davis’ key business areas.
Liquidity and Capital Resources
As of March 31, 2025, Ziff Davis had $598.2 million in cash, cash equivalents, and investments, with $517.6 million held domestically and $80.5 million held internationally.
The company has a $350 million revolving credit facility, of which $348.9 million was available as of March 31, 2025. In June 2024, Ziff Davis amended the credit agreement to increase the facility size and extend the maturity date.
In July 2024, the company issued $263.1 million in new 3.625% Convertible Notes due 2028 and used the proceeds to repurchase $400.9 million of its existing 1.75% Convertible Notes.
Ziff Davis’ other material cash requirements include $864.8 million in long-term debt, $35.3 million in future minimum lease payments, and $30.8 million in uncertain tax positions. The company believes its existing cash, cash flows from operations, and available credit facility will be sufficient to meet its anticipated needs for the next 12 months.
During the first quarter of 2025, Ziff Davis used $35.0 million in net cash for financing activities, primarily for share repurchases. Cumulatively, the company has repurchased 9.5 million shares at a cost of $614.5 million under its $1.5 billion share repurchase program.
Analysis and Outlook
Ziff Davis delivered solid revenue growth in the first quarter of 2025, driven by strength in its advertising and performance marketing business. The company’s diversified portfolio of digital media and internet brands across technology, shopping, gaming, health, connectivity, and cybersecurity has enabled it to capitalize on favorable industry trends.
The Technology & Shopping and Health & Wellness segments were particular standouts, with double-digit revenue growth and improved profitability. The Connectivity segment also continued its steady performance, while the Gaming & Entertainment and Cybersecurity & Martech segments faced some headwinds.
Ziff Davis’ focus on enhancing its offerings, investing in new products and services, and pursuing strategic acquisitions appears to be paying off. The company’s ability to adapt to technological changes and diversify its revenue streams has been a key strength.
However, the company faces ongoing risks and challenges, including competition, regulatory changes, intellectual property protection, talent retention, and potential macroeconomic volatility. The recent decline in the company’s stock price, if prolonged, could also pose a risk of future goodwill impairment.
Looking ahead, Ziff Davis seems well-positioned to continue its growth trajectory, leveraging its diverse portfolio of leading digital brands and strong cash flow generation. The company’s focus on innovation, strategic M&A, and prudent capital allocation should help it navigate the evolving digital media landscape. Investors will be closely watching the company’s ability to maintain its momentum and deliver on its financial and operational objectives.
