Good day, ladies and gentlemen, and welcome to the Ziff Davis Second Quarter 2025 Earnings Conference Call. My name is Tom, and I will be the operator assisting you today. [Operator Instructions] On this call will be Vivek Shah, CEO of Ziff Davis; and Bret Richter, Chief Financial Officer of Ziff Davis. I will now turn the call over to Bret Richter, Chief Financial Officer of Ziff Davis. Thank you. You may begin.

Thank you. Good morning, everyone, and welcome to the Ziff Davis Investor Conference Call for Q2 2025. As the operator mentioned, I am Bret Richter, Chief Financial Officer of Ziff 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 is available on our website. 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. If you have not received a copy of the press release, you may access it through our corporate website at www.ziffdavis.com. In addition, you'll be able to access the webcast from this site. 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 e-mail questions to investor@ziffdavis.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 would 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-K filings, recent 10-Q filings, various proxy statements and 8-K filings as well as additional risk factors that we have included as part of the slide show 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 the nearest GAAP equivalent. Now let me turn the call over to Vivek for his remarks.

Thank you, Bret, and good morning, everyone. We're very pleased with our second quarter results, which exceeded expectations, with revenues growing nearly 10% and adjusted EBITDA growing nearly 12% year-over-year. This was our strongest quarter of revenue growth since 2021, and in that sense, we delivered truly breakthrough results and it also represents the fourth consecutive quarter of revenue growth for Ziff Davis. While we continue to execute on our operating plans, we remain committed to repurchasing our shares and have successfully completed 5 tuck-in acquisitions in the first half of the year. Our healthy balance sheet continues to support ample opportunities for capital allocation. As was the case last quarter, 4 of our 5 reportable segments grew in revenues in Q2. These 4 segments, which historically were combined into the Digital Media segment grew nearly 13%. As importantly, our fifth segment, Cybersecurity & Martech declined less than 1% in the quarter and is poised to return to growth in Q3. Having the Cybersecurity & Martech segment contributing to overall growth would be an important milestone for the company. Let me share some observations about each of our 5 segments. As a reminder, this new reporting structure was implemented earlier in the year to provide greater transparency and a clear appreciation of the intrinsic value of our key businesses. Tech & Shopping's revenues grew by over 11%, with adjusted EBITDA growth of over 5%, supported by the CNET acquisition and some improving trends in our B2B business. In fact, in Q2, Spiceworks launched a successful paid subscription version of its cloud help desk software, which helps IT administrators manage help requests from employees. SaaS offering already has over 20,000 paying business customers. CNET Group also renewed its partnership with Best Buy which allows both Best Buy and CNET Group sales…

Thank you, Vivek. Let's discuss our financial results. Our earnings release reflects both our GAAP and adjusted non-GAAP financial results for Q2 2025. My commentary will primarily relate to our Q2 2025 adjusted financial results and the comparison to prior periods. Please see Slide 4 for the summary of our financial results. Q2 2025 revenues were $352.2 million as compared with revenues of $320.8 million for the prior year period, reflecting growth of nearly 10%. Q2 2025 adjusted EBITDA was $107.7 million as compared with $96.3 million for the prior year period, reflecting growth of nearly 12%. Our adjusted EBITDA margin for the quarter was 30.6%. We reported second quarter adjusted diluted EPS of $1.24 as compared with $1.18 in Q2 of 2024, reflecting growth of more than 5%. This increase reflects higher adjusted EBITDA and lower fully diluted shares outstanding. This was partially offset by a number of factors, the largest of which related to changes in certain foreign exchange rates, which drove an increase in other loss net for the quarter that reduced our Q2 2025 EPS by approximately $0.10 per diluted share. Our second quarter financial results reflect significant growth and it's worth repeating Vivek's observation that this quarter reflects the company's highest level of quarterly total revenue growth since 2021. And while a portion of this growth was contributed by recently acquired businesses, the quarter also reflects positive total organic growth, including organic growth from contributions from our Gaming & Entertainment, Health & Wellness and Connectivity segments. Certain brands within Technology & Shopping and Cybersecurity & Martech contributed to organic revenue growth as well. We are very pleased with these results and the progress we have made through the first half of 2025. We believe that these results reflect the diversity and resiliency of our revenue…

[Operator Instructions] And the first question today is coming from Shyam Patil from Susquehanna.

Nice quarter. I had 1 question I guess for Vivek. With the increased segment level disclosures that you guys are providing, what are you guys hoping to communicate to the market, especially regarding the intrinsic value versus the current public market valuation?

Yes. No, look, thanks for the question. And look, I think we're absolutely hoping that investors take the time to assess each of the 5 segments. So as I noted, 4 of them collectively grew 13%, but unpacking that, we've got 3 of the segments growing double digits, one high-single digit and the 1 that didn't grow, Cyber & Martech, we believe, will grow. So I think just there are differing levels of growth and margin profiles, the adjusted EBITDA similarly collectively grew 12%, but the segments grew from a range of 5% to 24%. So each of these is worth spending time on. And I think more broadly, as they -- as investors kind of peel the onion and study the company, we hope they appreciate a few things: that we have a pharma commercialization and consumer health platform that's growing double digits. That's the Health & Wellness segment. We've got a data-as-a-service business with all kinds of AI tailwinds, also growing double digits. And that's the Connectivity business. We've got a platform at the center of the fastest-growing entertainment category, which is video games, and that's the Gaming & Entertainment segment. And then finally, we have a software unit that pointed to growth with the Cybersecurity business of scale with great margins and organic growth now. And we've got an intent-driven Tech & Shopping portfolio which has got great EBITDA growth as well. And so it can -- I know at times, it can feel like a lot, but I do think that if investors spend time studying the various elements, I think you come to a pretty compelling investment opportunity. And I'd also say to our sell-side and buy-side analysts, I think if you could go through some of the parts valuation exercise, I think that would be revealing. So look, I know it's only been -- it's been relatively new. We're only a couple of quarters into the new segment reporting. It takes a while, I think, for this kind of information to get digested. And by the way being very responsive to the market, this is something that shareholders have been asking for, for some time. And so we're pleased to be able to provide it, and we hope that it brings more insight into, as you say, the intrinsic value of the company.

Your next question is coming from Cory Carpenter from JPMorgan.

I had 2, I think both for you, Vivek. Maybe just to start, if you could update us on trends you're seeing broadly in the ad market. Last time we talked 3 months ago, of course, there was a lot of disruption going on around Liberation Day. And then secondly, good to see you back in double-digit growth. Just maybe how are you thinking about the sustainability of the trends you saw this quarter and Vivek, could you just remind us of how you think about the right long-term growth and margin framework for the company?

Yes. Thanks, Cory. So the ad business grew a little over 15%. With the new segment disclosure, you can kind of see the composition by category. So Health & Wellness is 42% of the ad business; the Shopping & Tech is kind of another 40%, but Shopping is about 21%, Tech is about 19%. So you get a sense of where that break is, and then Gaming is about 16%. So in order, I guess, of importance, what I would say is Health is very strong. Great drug pipeline, high-teens growth. We feel very good about this category near term, long term. Shopping was down a touch, but that's mostly the Offers brand. So I wouldn't say that's a reflection of necessarily market and the Offers brand is a brand that we put into the managed decline category. So we feel reasonably good about where retail sits. Tech was strong. And yes, CNET was obviously a major contributor in our equation, but consumer tech generally outside of CNET is strong and B2B is improving. It's still declining, just to be very clear, but it's declining less than we thought, which is really good. And then Gaming, it's kind of up mid-teens. So as I like to do when I talk about the advertising market, I do like to break it down by category because I think it is -- it does operate categorically versus in aggregate, but generally feeling really good about that. With respect to your thoughts, question around long-term growth, look, I think our mindset hasn't changed, which is we expect to be a double-digit total growth company from a revenue point of view, roughly half organic, roughly half inorganic. Those delineations are always funny because of the way in which we do organic and inorganic calculations. You can have a business that you've acquired that is growing significantly organically and that we put into our inorganic category. So put aside, I'd say roughly 50-50 double-digit growth and then mid-30s margin. So I don't think that's changed. I think that's been the way we've been thinking about the business for some time, as you know. That hasn't been what we accomplished over the last little bit, but we're both glad to be back there. And that's where we expect to be long term.

Your next question is coming from Ross Sandler from Barclays.

Just had a question on the incremental EBITDA margin. So specifically, it looks like given the new segment breakdown, which thank you very much for that, looks like Tech and Health, your 2 biggest ad revenue pools, both growing solid but had margin contraction in 2Q. So could you just unpack, some of that's probably onetime kind of acquisition-related costs or are there other things dragging that down? And then more broadly, how do you view -- now that we're growing organically across the board, how do you view the incremental margin and how that might flow through in the future?

Yes. No, Ross, I would say that I can't point to anything specifically around any changes in the cost structure of the business. And so a lot of this is when you divide our company, which is relatively small, into 5 pieces, I think you can see some lumpiness because similarly, Gaming & Entertainment's EBITDA grew 24%, right? So I often say, like it's better to look at these things on a multiple quarter basis to really get a sense of what the true kind of EBITDA margin is for these segments. So I wouldn't say that there's anything in specific in any of these businesses that I would point to that speaks to kind of a structural change in the margin profile of the business. Bret, I don't know if you...

I think that's right. I think we do get to sort of the math of relatively small numbers when you take 1% of the revenue item in a single quarter. In any given quarter, you have mix dynamics, you have campaign dynamics, you have one-off dynamics, you have investment dynamics. They could be for people, they could be in -- with vendors. So I think it's more important, as Vivek said, to keep that lens pretty wide and compare it to our overall expectations of achieving sort of mid-30s adjusted EBITDA margins. And in any given 3- month period, you're going to see some variability. M&A is also a factor as we -- in different divisions, in as we mentioned, Tech & Shopping, CNET, whatnot. So...

And then just overall, as a company, obviously, on a year-over-year basis, we have seen some margin expansion in the quarter. There was 1 thing as I was thinking about this in Tech & Shopping we have this PC game investment business where we've been investing in games. That is a business that we are essentially sunsetting. That has actually been a drag. So that might be something there, but that's being sunset. And so that might be 1 small piece on the Tech & Shopping but again small...

Small piece in dollars to move -- you could be within about 1 point of margin.

Your next question is coming from Ygal Arounian from Citi.

I guess -- sorry, I may have missed if there was commentary on this on -- because I just jumped on a little bit late. I think there's been a lot more talk this quarter than we've heard even over the past few so it feels like there's an acceleration of the trends around agentic AI -- or sorry, not agentic AI, but AI overviews and search and the distribution of traffic across the open web. And I know you guys talked before about how you're positioned there and a lot of your traffic coming directly to you guys. And maybe just an update on what you're seeing there and how you're feeling? And then I guess at the same time, if you can just talk about your approach with LLMs and if that's changed at all; how you're thinking about that.

Yes. No, no. Thank you. So look, I'll reiterate Ygal, what I shared last quarter, which is 35% of the company's total revenues are ads on our O&O web traffic, and about 40% of that comes from search. So that gives everyone kind of an understanding of kind of order of magnitude. And I think when you multiply those numbers together, you come to the conclusion that we are different than a lot of other businesses that one might compare them -- compare us to. I mean, look, there's no doubt we're experiencing a bunch of search engine result page volatility, but we've been talking about zero-click search probably for a decade, which is why we're not leveraged to SEO, we generate a ton of non-web engagement. And frankly, so much of our revenues are not actually traffic based. And I think this is the most important aspect to understand. We are not a programmatic ads business. I mean that is less than $50 million of our annual revenue or programmatic ads. And so that's just something I think to reiterate. And look, I listed a number of examples of how we monetize our brands, right, IGN Live, the parenting and pregnancy clinical studies business, keep partnerships like Best Buy, Spiceworks software. That's just a few. I could go on and on. But it's a far more dynamic and diversified business model that, again, I think as investors dig into the company with our new segment reporting, we'll recognize that I think we've given a little bit too much oxygen to this topic when we're talking about our business. And by the way, a significant portion of our adjusted EBITDA, Connectivity and Cyber & Martech is not part of this AI search narrative at all. With respect to your question…

Okay. Great. And then I want to follow up on the moment of influence product and it sounds new and interesting. And maybe talk about the go-to-market approach there a little bit more, what that opportunity is and expand a little bit more on what you're seeing so far from advertisers.

Yes. No. So we have built, and it's a proprietary AI-based essentially data management platform. We're ingesting all sorts of signals across all of our touch points. It goes into a system that, based on what a marketer's targets and goals are, then spits out essentially the who, who should you be targeting, when and then where and executing campaigns that run on our properties, on our properties' content on social platforms, video platforms and then more broadly on the open web. And so in many ways, it's limitless inventory against a fairly large signal capture. Our go-to market, however, is not a product that would be sold at a corporate level. Ziff Davis does not sell advertising at a corporate level, we do it within each of our verticals. And so within each of our selling verticals, so say, Health & Wellness, the Everyday Health Group; or IGN entertainment; or the CNET Group; or the RetailMeNot group as sort of the key selling organizations. Each of those organizations will have their own branded version of this technology to go to market to supplement the existing ad products. And so the first one being rolled out is called [ Halo ], and it is within the Everyday Health Group, and that has received a fair amount of traction. But there are those versions in each selling group that will roll out over the course of the next quarter or 2. We're very excited about it because I think we've gotten to the point where the data sets we have, leveraging AI gets us to a level of addressability and targetability that we think can be really, really compelling. And remember, this is all first-party data. This is all privacy protected, which is very important, particularly in a lot of the categories in which we operate. So we're excited.

Your next question is coming from Robert Coolbrith from Evercore ISI.

Just wanted to ask within Health & Wellness, it seemed like you had a pretty notable sort of uptick in -- not so much spend per advertising customer, but the participation of advertising customers. So just wondering if there's anything you can talk through in terms of the trends and what we maybe expect over the next couple of quarters, just given that we don't have a ton of historical data. But just anything on the trends there that really sort of lifted advertiser participation. I think that your growth in advertising customers was maybe up, I want to say 14% year-over-year. So notable acceleration there.

Yes. No. Thank you for the question. And I think, look, I think part of why we're seeing a larger advertiser count is that while pharma is the core of what Health & Wellness really does do and pharma commercialization in the market is very strong, we have been looking to expand more broadly to more Health & Wellness brands or brands that have a health or wellness marketing component or target. And so I think we've had success doing that. And brands like theSkimm have been really helpful in helping us expand our base. And so that -- part of what that business is looking to do is to diversify. Look, the pharma category is fantastic. I think it's a real competitive advantage, and it's one that we like a lot. It doesn't mean we couldn't -- we shouldn't participate in other related and adjacent categories. And as you know, overall, just societally the focus on Health & Wellness and longevity. That's another big driver. There are just so many longevity brands and solutions out there. So I think, demographically, we're kind of well aligned, I think, with brands like theSkimm I think we do really well in those categories. So I think it's really -- there's a bunch here to like. The other thing is, I'll point out that our Lose It! property, which is a subscription-based property, has started to accept advertising for the free customers that we have that are pretty substantial. Again, a pretty good market, right? These are people who are interested in calorie tracking and meal logging and weight loss and fitness and so that opens up a lot of other interesting advertising opportunities.

Great. Just a follow-up also on Connectivity. Almost the reverse dynamic, you're -- I think you had an inflection in your quarterly revenue per customer there that was fairly pronounced. If you could just talk through some of the trends there as well.

Yes. That's a funny one. I'll tell you what. This is an example of creating a set of common metrics across 5 divisions that aren't always common as we just pointed out. And so this is a little bit of a different animal where you have a combination of high price point customers on the Speedtest Intelligence side matched with lower price point customers on the Ekahau side. And so sometimes that has a little bit to do with mix and it's a computed metric more than a managed metric, if I'm going to be honest with you. So it's not something I've even looked at. It would be something that I'd have to probably go in and do a little bit of gathering, which we can do and look at. But overall, I think what it probably points to is we're seeing a lot more growth out of Speedtest Intelligence and RootMetrics and the businesses that are at a higher price point. Ekahau is growing, but it's not growing yet at the rate that we'd like it to grow, and that is that I'm excited for. It's not showing up yet. It's probably more of a 2026 event, but the WiFi 7 router refresh will be a really interesting tailwind for this business, but it's not playing out yet.

Thank you. There are no other questions in queue at this time. I would now like to hand the call back to Bret Richter for any closing remarks.

Thank you very much, Tom, and thank you, everyone, for participating in today's call. We look forward to our ongoing dialogue with you in the balance of the year. Have a great day.

Thank you. This does conclude today's conference call. You may disconnect your lines at this time, and have a wonderful day. Thank you once again for your participation.