Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ziff Davis Inc (ZD, Financial) reported a 3.7% increase in total revenue and a 9.6% growth in adjusted EBITDA for Q3 2024, marking it as the best quarter of the year.
- The Digital Media segment saw nearly 6% revenue growth and over 14% growth in adjusted EBITDA, with all digital media verticals experiencing growth.
- The company successfully closed the acquisition of CNET, enhancing its portfolio of technology brands and positioning it as a leader in technology publishing.
- Ziff Davis Inc (ZD) repurchased 2 million shares of its common stock in Q3, reflecting a strong commitment to shareholder value.
- The company launched several AI-driven products across key verticals, enhancing capabilities in areas such as cybersecurity and health and wellness.
Negative Points
- The cybersecurity and martech segments experienced a revenue decline of over 4%, with challenges in the Moz SEO business due to a softening in new customer acquisition.
- B2B technology business faced a year-over-year decline, impacting overall growth rates.
- Organic revenue declined by less than 2% in Q3 2024, indicating challenges in achieving organic growth.
- The Moz Group faced softness in new customer acquisition, partly due to confusion around AI and search, impacting growth in the SEO segment.
- Despite improvements, the company is still a few quarters away from achieving positive growth in the cybersecurity segment.
Q & A Highlights
Q: Can you provide insights into the expected performance for Q4, especially regarding organic growth and the impact of the CNET acquisition?
A: Bret Richter, CFO, explained that Q4 will reflect underlying business trends, including seasonality in advertising. The full quarter impact of CNET will be seen, and while no specific organic growth metric was provided, Q3 showed significant improvement. Vivek Shah, CEO, added that challenges in B2B and cyber/martech segments are being addressed to improve margins and growth.
Q: How is Generative AI (Gen AI) impacting your search traffic and overall strategy?
A: Vivek Shah, CEO, clarified that only 10% of top queries include AI overviews, slightly up from last quarter. Gen AI is seen as additive to search activity, and high-quality content remains crucial. The company is focused on maintaining strong search rankings and diversifying traffic sources beyond search.
Q: What are the expectations for the advertising business in 2025, and how does CNET influence advertiser relationships?
A: Vivek Shah, CEO, noted that CNET's integration with other tech brands enhances competitive positioning, allowing for larger, integrated advertising programs. The company is optimistic about consumer tech trends and AI-related advertising opportunities. While specific 2025 guidance wasn't provided, the focus remains on bottom-line growth.
Q: Can you discuss the recent study on publisher data used for AI model training and its implications for licensing deals?
A: Vivek Shah, CEO, highlighted that the study shows premium publisher content is crucial for AI model training. The company believes licensing is necessary for training, not just for retrieval augmented generation (RAG). This underscores the importance of high-quality content in AI development.
Q: What are the current trends in M&A activity, and which verticals are most attractive for acquisitions?
A: Vivek Shah, CEO, stated that the M&A environment is normalizing, similar to pre-COVID conditions. Tech and shopping have been active areas, with gaming showing promise due to its fragmentation. Connectivity, health and wellness, and cyber/martech are also being targeted for potential acquisitions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
