Good day, ladies and gentlemen, and welcome to the Ziff Davis Third 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 Q3 2025. As the operator mentioned, I am Bret Richter, Chief Financial Officer of Ziff Davis, and I'm 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.ziffdavis.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@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 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-K filings, recent 10-Q filings, various proxy statements and 8-K filings, as well as additional risks and uncertainties 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 their nearest GAAP equivalent. Now let me turn the call over to Vivek for his remarks.

Thank you, Bret, and good morning, everyone. In our third quarter earnings release, we announced that Ziff Davis has engaged outside advisers 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 2 to 5 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 "sum 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 advisers 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 transaction 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…

Thank you, Vivek. Let's discuss our financial results. Our earnings release reflects both our GAAP and adjusted non-GAAP financial results for Q3 2025. My commentary will primarily relate to our Q3 2025 adjusted financial results and the comparison to prior periods. Please see Slide 4 for the summary of our financial results. Q3 2025 revenues were $363.7 million, as compared with revenues of $353.6 million for the prior year period, reflecting growth of nearly 3%. Q3 2025 adjusted EBITDA was $124.1 million, as compared with $124.7 million for the prior year period, reflecting a decline of less than 1%. Our overall adjusted EBITDA margin was 34.1% in Q3 2025. We reported third quarter adjusted diluted EPS of $1.76, up from $1.64 in Q3 2024, reflecting growth of more than 7%. This increase is due in part to our share repurchases, which reduced third quarter 2025 adjusted weighted average fully diluted shares by nearly 3.3 million shares or 7.5% as compared with the prior period. Importantly, year-to-date, we have delivered growth in revenues, adjusted EBITDA and adjusted diluted EPS as well as a significant amount of free cash flow. Slide 5 reflects performance summaries for our 2 primary sources of revenue: advertising and performance marketing and subscription and licensing. Both of these revenue sources grew year-over-year in the third quarter of 2025. Q3 2025 advertising and performance marketing grew 5.9% as compared with the prior year period, while subscription and licensing revenues grew by 2%. Q3 2025 other revenues declined by $4.3 million year-over-year, reflecting the significant decline in revenues from our games publishing business, which more than offset growth from other products and services. Slide 6 through 10 reflect the Q3 financial results of each of our reportable segments. As Vivek noted, 3 of our 5 segments grew revenue in…

[Operator Instructions] And your first question this morning is coming from Robert Coolbrith from Evercore ISI.

Congratulations on the results. Vivek, I know you have some opinions about where the valuation disconnects versus intrinsic value may be most acute. I wanted to ask if you'd be willing to share any thoughts there. And then secondly, I'd imagine you've had some inbound interest from time to time in the past. Is there something unique about this moment that makes this the right time to entertain that interest in a more significant way? Is the volume of interest where you think you could drive some competitive auction dynamics? Or have you gone some of these businesses to a place where you think an exit now makes more sense?

So Rob, thanks for the questions. And I should also thank you, I know in your last note after our last call, you did do a "sum of the parts" analysis, which is what we were looking for. And I think to answer your questions, I do think things changed at the beginning of this year when we, for the first time, broke out the company into 5 reportable segments, which gave the entire marketplace a real view into the different businesses and the different drivers, the different growth characteristics, margin profiles, et cetera. And so look, up until then, I think for a lot of people, they were just trying to feel around and estimate. We did that, as I said, with the public market in mind, with our current investors and prospective investors and with analysts in mind. But what it also did was just attract a lot of attention from strategics and sponsors. And so look, from our point of view, that -- I would say that that was different than maybe in the past. And so the decision to engage advisers at this point was really in response to the level of inbound interest. But I would also say that we're at a point where the disconnect between the current value of the company and we believe the intrinsic value of the company, the true value of the company in our own minds, is probably at the widest it's ever been. And so with respect to your question on specific businesses, look, we go into this with an open mind, with a goal of unlocking the maximum amount of value. And what I would say is that we believe every one of our divisions should command a multiple, each of them individually, higher than what is the current Ziff Davis multiple. So in my mind, this value disconnect isn't just in a couple of places, it really is across the board.

Your next question is coming from Cory Carpenter from JPMorgan.

I had a follow-up to the strategic review and then one on AI overviews, if I could. Just, Vivek, kind of continuing on that theme, maybe what all is on the table here? It sounds like you think there's a disconnect across all divisions, but are there any properties that maybe you think of as core or off-limits in terms of divesting? And would you consider perhaps the whole company, if that was something that you were seeing interest in? And then on AI overview, some of the other publishers called out an impact this quarter on traffic just as that ramped up a little faster than expected. Curious to hear what you've seen there.

Thanks for the questions, Cory. So starting with: is anything off the table? No. We're, as I said, we're going in with an open mind. And so we don't have a specific preference. With respect to your question about the whole company, look, the inquiries have been about specific businesses, and we do believe that exploring opportunities for select units is likely to be far more value accretive than considering a transaction for the entire company. That said, look, to the extent we receive credible interest in the broader company, we have an obligation to evaluate any opportunity that could unlock meaningful value for shareholders. I think with respect to just the AI overviews and traffic, might be just worth sort of reiterating what I've said in the past in terms of our view that the company is pretty well positioned and insulated from fluctuations in search traffic. 35% of our total revenue is traffic -- is web traffic dependent, half of that coming from search, so roughly 17.5% revenue exposure. And in AI overviews specifically, AI overviews currently appear in 29% of the queries that drive the lion's share of our traffic, which is actually a tick-down. So the prevalence of AI overviews with respect to the queries that are valuable to us is relatively stable. What I will say, so I don't -- I'm not thinking as much about AI overview prevalence. I'm thinking more about search volatility. There have been a number of algorithm changes, and happening with pretty significant frequency, that's creating a fair amount of sort of rank volatility, which is different than, I think, the AI overviews piece. So that's something we're watching. I think there's a lot of experimentation going on right now in the Google search experience. And so we're feeling some of those chops and some of those bumps.

And your next question this morning is coming from Shyam Patil from SIG.

I guess you, as you mentioned, you've prepared the market for this kind of announcement just with your segment-level disclosures as well as some of your commentary in the past. I'm just curious, what do you prefer? And then maybe kind of a separate but related, like what do you think is more likely, selling pieces of the business, selling the whole company? And then if it is just selling off certain pieces, what's your value kind of creation and unlocking kind of thesis or philosophy going forward? Would it be we buy businesses, we sell them and then we use that cash to buy back stock or do further M&A? Just how do you just think about kind of those things kind of going forward as you kind of try to figure out what the business could look like over the next 3 to 5 years?

Shyam, all great questions. Look, I'll start with your question on preference. And my preference is whatever creates the most impactful and positive outcome for the per share price of Ziff Davis. Look, our shareholders have been patient. We feel an overwhelming obligation to really reward that patience. So I would say that the preference is a function of what's going to unlock the most value. And so it's hard to know or say what that's going to be until we get into this process and start to really understand market dynamics. And as you know, many of our businesses are performing really, really well. And so I think we feel optimistic about where that dialogue is going to go. In terms of the larger strategic question you're asking about the company, look, I think what remains unchanged is that we are, I think, very good at identifying opportunities to use our digital transformation skill set to unlock value in businesses across the landscape. We've done it with digital publishing businesses, we've done it with data businesses, we've done it with software businesses. And that remains unchanged, right? And so I think we're going to continue, however this company evolves, to continue to be a programmatic and serial acquirer to unlock value. Obviously, at this point -- and we have done that generally with the view of being long-term holders of those assets. And the market is telling us right now that, hey, look, that may not be the right equation. And so that's where thinking about these options starts to make sense, whether that's the continued model or we revert back to the hold model. I can't say. I think we just have to be flexible. I think we have to be thoughtful about all of this. The other thing I'm going to say is that just we're going to consider all opportunities, so that could be sales, that could be investments, that could be spinoffs. So I think there are various transactional options that we're also going to consider in this process.

And Vivek, I might just add one short thought. I mean widening the lens. Our overall approach is to provide products and services to the communities we serve effectively and generate profits, cash flow and growth. And use that cash flow to ensure, one, we have a healthy balance sheet, and then allocate that capital to go back to that core philosophy of generating growing cash flows. There'll be times, and there have been times, in our journey where we shift that capital allocation to -- from M&A to share buyback. And now we're adding one more leg to the equation, we're considering other opportunities to unlock value. So I don't think overall the approach changed or sets a new course for the company. We're just reacting to where we are in the broad market.

Your next question is coming from Ross Sandler from Barclays.

Great. Vivek, I guess, a philosophical question. If we're at the peak of system-wide Google referral traffic hit for the broader open web, the broader industry, and revenue impact or revenue headwind for companies like Ziff Davis or any other publisher might be peaking right now and potentially diminishing in a year or 2, why is right now the best time to put the for-sale sign up? Has the outlook for your display growth changed dramatically at all? I'm just curious as to why right now if we're in the peak of that impact. And then, Bret, just a modeling question. I think you said we're going to land in the lower half for revenue, which I think implies like a low single-digit growth rate for advertising in the fourth quarter. Just curious what you're seeing thus far, and yes, the framing of that guide.

Yes. So Ross, it's an interesting question, and it actually reflects I think the dynamics that are existing in other businesses and not ours, right? So I think what I'm suggesting is this whole AI overview narrative really hasn't been relevant to our businesses. I mean take our Health & Wellness business for a moment. Close to 13% revenue growth in the quarter, year-to-date 12%, adjusted EBITDA up 18%. This business is doing exceedingly well. I mean it's sort of Exhibit A with respect to, I think, the nature of our businesses relative to maybe others in the marketplace. So I would say it maybe a little bit differently, which is we're demonstrating that, notwithstanding what seemed like large industry headwinds, our businesses are doing exceedingly well. So that's one thing, and I think it's possibly why we have had folks reach out on various parts of the company. I will also point out that 2 of the segments have nothing to do with Google, and that is Connectivity and the Cybersecurity & Martech segments. And as you know, within Cybersecurity & Martech businesses, our various businesses. So look, I think that -- and then even within Tech & Shopping, RetailMeNot has a different kind of dynamic. So I think maybe the issues relating to Google and search, while relevant to a few of our brands, may just not be that relevant to the rest. And so with that recognition in the marketplace, which is, "Wow, you know what, these businesses are built differently. They have different dynamics. The market -- the public market doesn't appreciate that, doesn't see that. We do." There's an opportunity here. And I think that's what's going on.

Ross, with regards to your second question. I think it's a fair observation too, and of course, we haven't provided that figure specifically. But looking at what might be implied for advertising in the fourth quarter, I think you said low single digit. I think first, I'd call out probably the most important factor is we'll be lapping the CNET acquisition in the fourth quarter. So we'll be comparing CNET year-over-year, while up to this point for the most part it's been a contributor. And Vivek highlighted a couple of things and I highlighted, that certain of our businesses, the momentum in second quarter didn't quite carry through. And just emphasize what Vivek just said, in other businesses like Health & Wellness, it certainly did. But a little soft product launch in the marketplace as it relates to gaming and advertising, some search volatility, which impacts Tech & Shopping. I think it's a fair observation that we'd be looking for subscription growth to outpace advertising growth in the fourth quarter.

Your next question is coming from Rishi Jaluria from RBC.

Wonderful. Look, I appreciate all the color and increased transparency. Definitely do agree stock seems very undervalued here, and anything that can release shareholder value is great. But I want to turn now to maybe the M&A opportunities. Because, Vivek, I mean, I think it's pretty clear from the way you're talking about the impact of AI search overviews and maybe AI search as a whole, that you seem to be -- your properties seem to be weathering this better than a lot of smaller properties. And maybe I want to think, where is there an opportunity for you to get really aggressive as an acquirer or a consolidator with some of these properties out there that don't have that scale, that don't have the platform, don't have the diversity and, quite candidly, don't have the experience of, as you alluded to, weathering all the different search algorithm changes that have happened over the past decade, and maybe more than that? Because it really feels like given where sentiment is today, and maybe we're at peak negativity on the AI search and media, that there really is just an opportunity for you to deploy a lot of capital right now and find some even smaller dislocated properties and really just kind of bring them in. Maybe walk us through how you're thinking about that, what sort of opportunities you see in the market?

Yes. No, listen, it's a great question. And I think all the following things can be true. We can be buyers of our shares, we can anticipate transactions to unlock value for our company, and then we can deploy capital in acquisitions. Because I agree with your view, which is 2 pieces, that we have built the platforms and approach that has worked and weathered the storm. Others may not have. And isn't that a buying opportunity? So for sure, we agree with that. And I'll point out that, look, we've deployed close to $70 million for acquisitions thus far this year, and that program is not slowing down at all. But there's also no question that a big share of our capital deployment has been going to buybacks. It continues to stand out as, frankly, the best option for our capital. I mean we could buy this, what we believe is an amazing company, at almost unbelievable multiples. And so we've continued to do that. I think through just to date, it's 3.6 million shares. It's a significant part of our shares outstanding. And that's going to continue. So look, I think that we're always balancing how we deploy our shareholders' capital in the right way against the realities of the per share price experience for our shareholders, and looking to find that balance in this process and going forward.

Your next question is coming from Ygal Arounian from Citi.

Maybe the M&A question from a different angle, as you kind of go through this process, if you're more willing to think a little bit more about expanding into new verticals or areas of sort of higher growth? And then on the AI side, maybe on licensing in particular, and I know there's a lot going on there. One of your competitors talked about sort of a marketplace model where, rather than an all-you-can-eat, sort of a pay-as-you-go. And it sounds like there's more interest for the LLMs to come to the table with the Cloudflare blocking. Just wanted to get an update on how things are going there on your approach.

Yes, 2 great questions, Ygal. So just on the M&A front, look, we've always had a preference for buying leadership brands. CNET, leadership brand in tech; IGN, leadership brand in gaming; RetailMeNot, leadership brand in shopping; Everyday Health, leadership brand in health, et cetera, et cetera. So I think we're always looking for brands that have leadership, because I will say that leadership brands can define their business models by demand and not supply. So much of the conversation is around supply because so much of the media business model has been around programmatic, which is a supply-driven business model, not a demand-driven business model. And so I think we're going to continue if we were to do things that look for businesses that enhance existing leadership or established leadership in new categories. With respect to AI licensing, so we are active, very active with AI licensing discussions and encouraged by sort of this growing market consensus that compensating content owners is just a reality and a necessity. Now we're not going to sign any deal that doesn't provide fair value exchange for our content because this is -- setting the right financial precedent is important for a sustainable model. As you pointed out, the CDN layer with Cloudflare and others, we continue to block AI bots. And I think sources do matter. I think if you have a garbage in, you're going to have a garbage out problem in these models. And so I encourage everyone to always look at the sources when you look at the answers. I think you'll be surprised now to see what some of the sources are, because as trusted sources of information block, like we and others are doing, it does create, I think, a quality problem. I'll also point out, we've joined RSL, which is Real Simple Licensing, which has a standard that has been set which essentially adds machine-readable licensing terms to our robots.txt and also the RSL Collective, which is kind of like ASCAP or BMI, where there's sort of a negotiated collective. All to say that I do have a fair amount of optimism that the future will represent a pretty interesting new business model for content that receives compensation from various AI systems and models. So I am confident in that. I just think that in the early goings of this, you kind of want to set the precedents right.

Your next question is coming from Chris Kuntarich from UBS.

Vivek, you've called out that the cash that was generated from the Consensus transaction, that was put towards 6 transactions. You were kind of talking in a previous response about going out and acquiring leadership brands. I guess in the event of a spinoff, should we be thinking about kind of the philosophical shift even further kind of on the margin towards targeting a different growth profile of business, maybe kind of expanding from leaders to emerging leaders and looking at something, again, with potentially higher growth profiles?

Yes. Look, it's a great question and it's one we talk about a lot, which is, in the end, how do we arrive at the returns profile? One of the challenges for us is that, look, I think in the end -- or one of the realities for us is that we really focus on cash-on-cash returns, not necessarily multiple expansion to drive valuation, right? So we've always said, look, we're just going to be an EPS compounder in double digits. We're not at that target right now, I understand that. But that is our goal and expectation. And so look, I think to do that, we really do price/earnings and cash flow. And it's sometimes hard with some things that are smaller and growthy for that to be inside of our portfolio and get any credit. And it may not have the same margin profile and free cash flow characteristics. And so I think we focus a lot on free cash flow, free cash flow yield. And to the degree to which it fits our formula, I think we'll do it. But what we're not signaling here is a change in our formula. I do really think that what we have done an exceedingly good job of is finding investment opportunities where we can unlock a fair amount of cash flow out of those businesses. So I wouldn't want to abandon that in whatever we do. And then whatever this journey -- wherever this journey takes us, I still think we're going to very much be committed to that approach.

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

Thank you, Tom, and thank you, everybody, for joining us today. We appreciate your time and investment in the company. We look forward to speaking with you over the next couple of months and during our fourth quarter call.

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