ZD Q2 Deep Dive: Segment Growth and AI Initiatives Drive Outperformance

August 12, 2025 at 03:15 AM EDT

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Digital media company Ziff Davis (NASDAQ: ZD) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 9.8% year on year to $352.2 million. The company’s full-year revenue guidance of $1.47 billion at the midpoint came in 0.5% above analysts’ estimates. Its non-GAAP profit of $1.24 per share was 4.5% above analysts’ consensus estimates.

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Ziff Davis (ZD) Q2 CY2025 Highlights:

Revenue: $352.2 million vs analyst estimates of $337.1 million (9.8% year-on-year growth, 4.5% beat)
Adjusted EPS: $1.24 vs analyst estimates of $1.19 (4.5% beat)
Adjusted EBITDA: $107.7 million vs analyst estimates of $101.2 million (30.6% margin, 6.4% beat)
The company reconfirmed its revenue guidance for the full year of $1.47 billion at the midpoint
Management reiterated its full-year Adjusted EPS guidance of $6.96 at the midpoint
EBITDA guidance for the full year is $523.5 million at the midpoint, above analyst estimates of $516.9 million
Operating Margin: 9.5%, in line with the same quarter last year
Market Capitalization: $1.41 billion

StockStory’s Take

Ziff Davis delivered a quarter of robust growth in Q2, marked by sales and non-GAAP profitability surpassing Wall Street expectations. The market responded strongly, reflecting investor confidence in the company’s diversified business model. Management attributed outperformance to the broad-based expansion across four of five operating segments, with CEO Vivek Shah highlighting the Health & Wellness and Connectivity divisions as standout contributors. Specific product launches and successful event programming, such as IGN Live, also fueled engagement and revenue.

Looking forward, Ziff Davis’ guidance is grounded in expectations of continued momentum in Health & Wellness and Connectivity, which management believes will drive growth through the remainder of the year. CEO Vivek Shah emphasized strategic investments in AI-driven products, ongoing M&A activity, and a disciplined capital allocation strategy as core to the company’s outlook. Management noted their focus on broadening advertiser participation and leveraging first-party data to support targeted marketing efforts, with Shah stating, “Our ability to deliver positive tangible results for pharma with both patients and providers continues to place us in a competitively strong position.”

Key Insights from Management’s Remarks

Management pointed to broad-based segment growth, targeted product innovation, and successful acquisitions as the primary drivers behind the latest quarter’s results.

Health & Wellness acceleration: The Health & Wellness segment saw nearly 16% revenue growth, benefiting from strong pharma commercialization services, record results in medical education, and expanded clinical studies in pregnancy and parenting. Management also cited margin improvement from selling subscriptions directly to consumers.
Connectivity demand and expansion: Connectivity returned to double-digit organic growth, driven by increased demand for Speedtest data from service providers, expansion into emerging markets (notably EMEA and APAC), and enterprise adoption of RootMetrics’ network validation services.
Gaming & Entertainment engagement: IGN Live replaced the longstanding E3 conference, drawing over 8,000 attendees in person and reaching 300 million fans globally through digital platforms. These high engagement levels contributed to the segment’s nearly 8% revenue growth and 24% adjusted EBITDA growth.
AI deployment across businesses: Ziff Davis leveraged AI to enhance product capabilities, including AI-powered features in the Lose It! app and the launch of VIPRE Integrated Email Security in the Cybersecurity & Martech segment. The company also rolled out an AI-based data management platform for advertisers, which is being adopted across verticals.
Strategic tuck-in acquisitions: Three acquisitions in the quarter expanded the company’s Health & Wellness and Cybersecurity & Martech portfolios. Management highlighted disciplined capital allocation and the integration of newly acquired brands, such as Well+Good onto theSkimm platform, as important contributors to portfolio strength.

Drivers of Future Performance

Ziff Davis expects revenue and margin expansion to be driven by segment leadership in Health & Wellness and Connectivity, continued AI product rollouts, and active portfolio management.

Segment-driven growth outlook: Management anticipates Health & Wellness and Connectivity will remain the primary growth engines, citing strong pharma pipelines and increased demand for data services. The company expects these segments to contribute the largest share of second-half performance.
AI and data monetization: The company is investing in AI-powered platforms to improve advertiser targeting and operational efficiency. Management highlighted early positive feedback from clients and expects further adoption across verticals to enhance both revenue and profitability.
Active M&A and capital returns: Ziff Davis plans to continue disciplined acquisitions and share repurchases. While deploying over $50 million for acquisitions in the first half of the year, management stressed maintaining a strong balance sheet and focusing on opportunities that enhance long-term value. Risks include integration challenges and variable foreign exchange impacts on reported profitability.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) the pace of AI-powered product adoption and its measurable impact on advertiser engagement, (2) the return to growth in the Cybersecurity & Martech segment, and (3) continued momentum in Health & Wellness and Connectivity. Progress in integrating recent acquisitions and disciplined capital deployment will also serve as important markers for Ziff Davis’ execution.

Ziff Davis currently trades at $34.50, up from $31.10 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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