Ziff Davis (NASDAQ:ZD) said its second-quarter results reflected continued pressure in search-driven advertising businesses, partially offset by growth in several operating areas, while the company moved to reshape its capital structure following the sale of its Connectivity business.
During the quarter, Ziff Davis completed the sale of its Connectivity business to Accenture for $1.2 billion. Chief Executive Officer Vivek Shah described the transaction as transformative and said the purchase price represented a 14.5-times multiple of the business’s trailing 12-month adjusted EBITDA less capital expenditures.
Second-Quarter Financial Results
For continuing operations, Ziff Davis reported second-quarter revenue of $286.7 million, down 2.7% from $294.8 million a year earlier. Adjusted EBITDA declined 3.7% to $76.8 million, while adjusted EBITDA margin was 26.8%, compared with 27.1% in the prior-year period.
Adjusted diluted earnings per share rose 13.2% to $1.03 from $0.91, primarily due to a reduced share count following buyback activity, according to Chief Financial Officer Bret Richter. Free cash flow was $54 million, up 100% from the second quarter of 2025.
- Advertising and performance-marketing revenue declined 6% year over year.
- Subscription and licensing revenue was essentially flat.
- Other revenue more than doubled, increasing about $3.7 million, largely due to the contribution from Semantic Labs in the MarTech group.
As of June 30, the company held $1.6 billion in cash and cash equivalents and $100 million in long-term investments. Cash and cash equivalents exceeded outstanding debt by $734 million, Richter said.
Buybacks and Capital Allocation
Ziff Davis accelerated its share repurchases during the quarter, buying back 2.6 million shares under a 10b5-1 plan and deploying $121.5 million. Since July 1, the company has repurchased another 700,000 shares in the open market.
Shah said the company had deployed more than $200 million in 2026 to repurchase 4.5 million shares, reducing outstanding shares by nearly 11% over seven months. Since the beginning of 2024, Ziff Davis has repurchased almost 13 million shares. Approximately 7 million shares remain available under the board’s current authorization.
The company also completed two small acquisitions in the second quarter and has deployed $9.2 million for mergers and acquisitions year to date. Shah said Ziff Davis will continue to consider acquisitions, asset monetizations and repurchases, but will remain disciplined and patient in evaluating opportunities.
Segment Performance and Search Traffic Pressure
Tech & Shopping revenue declined 5% year over year, an improvement from a 13% decline in the first quarter and an 18% decline in the fourth quarter. Segment adjusted EBITDA rose more than 8%, aided by lower expenses and cost-saving measures implemented in the second half of 2025.
Shah said traditional search traffic remains under pressure, with the share of relevant search queries presenting Google AI Overviews rising to roughly 50% from approximately 36% when he last provided the metric. The company has sought to offset search declines through Instagram, Facebook, TikTok, YouTube, connected television, events, newsletters and native applications.
He also said CNET, PCMag and IGN were among the most-cited information sources in a Semrush AI Visibility Index report, which has prompted marketer interest in aligning with trusted editorial brands. Ziff Davis has begun generating what Shah called meaningful affiliate commissions directly through social channels.
Gaming & Entertainment revenue rose nearly 1%, as a record quarter at Humble Bundle offset advertising declines at IGN. Shah attributed IGN’s advertising weakness primarily to the current video-game release slate rather than traffic trends. He said the planned November launch of Grand Theft Auto VI could help drive activity for IGN, while Humble Bundle is preparing to roll out product features more quickly through an agentic coding-based platform redevelopment effort.
Health & Wellness revenue declined nearly 5% and adjusted EBITDA fell nearly 10%, primarily because of lower healthcare professional advertising revenue at MedPage Today. Shah said some large pharmaceutical customers have reduced spending and shifted budgets toward lower-cost, including AI-based, platforms. However, MedPage grew sequentially from the first quarter, and management expects sequential growth through the remainder of 2026.
Consumer direct-to-consumer advertising and subscription businesses benefited from growth in GLP-1 prescriptions and associated promotional spending. The company also added GLP-1 support to its Lose It! application and expanded Health eCareers’ association partnerships.
Cybersecurity & MarTech revenue and adjusted EBITDA each grew nearly 1%. IPVanish posted year-over-year growth for a fifth consecutive quarter, while smtp.com continued to deliver double-digit growth, management said.
AI Development and Outlook
Shah said AI has become central to the company’s product-development process. The proportion of released code authored by AI roughly doubled during the quarter, and a majority of newly released or updated code is now written by AI. Ziff Davis is targeting nearly all code being AI-authored before the end of 2026.
The company released 24% more code in the second quarter than in the first quarter despite lower engineering headcount, Shah said, with initial quality metrics holding steady. He said the effort is intended to lower the cost per feature delivered and support a wider product roadmap without proportionately increasing resources.
For the third quarter, Ziff Davis expects revenue to increase sequentially but decline by the low- to mid-single digits year over year. The company expects a modest improvement in adjusted EBITDA margin from the second quarter. For the fourth quarter, management expects a lower rate of revenue decline than in the third quarter, while adjusted EBITDA margins are expected to be slightly below the prior-year level.
Regarding AI content licensing, Shah said Ziff Davis is not inclined to enter agreements focused on retrieval-augmented generation that could compromise its ability to seek compensation for foundational model training. He said the company’s litigation with OpenAI is continuing and that management is waiting for greater legal clarity before pursuing what it views as a rational licensing market.
About Ziff Davis (NASDAQ:ZD)
Ziff Davis, Inc is a digital media and internet company that operates a diverse portfolio of online brands, subscription-based services and performance marketing platforms. The company specializes in technology publishing and digital marketing solutions, offering content, reviews and insights tailored to consumer and enterprise audiences. Ziff Davis’s flagship media properties include PCMag, which provides expert reviews and comparisons of consumer electronics and software, as well as IGN, a leading destination for gaming news, reviews and entertainment coverage.
Founded in 1927 by William B.
