Ziff Davis (ZD) Q1 2026 earnings summary

Executive summary

• Entered a definitive agreement to sell the Connectivity business for $1.2 billion, now classified as discontinued operations and excluded from segment reporting for all periods presented.

• Q1 2026 revenue declined by 1.9% year-over-year to $267.6 million, with adjusted EBITDA down to $63.4 million and adjusted EBITDA margin at 23.7%.

• Operating income from continuing operations fell to $2.9 million, and net income from continuing operations was $(0.8) million, down from $9.8 million in Q1 2025.

• The company is pivoting from a buy-and-hold strategy to active monetization of assets, significant stock repurchases, and targeted acquisitions to unlock shareholder value.

• Off-platform monetization, especially through social media and partnerships, is a growing focus to offset web traffic declines, with strong engagement and ad revenue from platforms like Instagram, YouTube, and TikTok.

Financial highlights

• Q1 2026 revenues from continuing operations were $267.6 million, down 1.9% year-over-year.

• Adjusted EBITDA was $63.4 million, down 11.2% year-over-year; adjusted EBITDA margin was 23.7%, down from 26.2%.

• Adjusted diluted EPS was $0.73, compared to $0.77 in Q1 2025.

• Free cash flow for Q1 2026 was negative $3.2 million, improved from negative $5 million in Q1 2025; net cash provided by operating activities rose 45.3% to $30.0 million.

• Advertising and performance marketing revenue declined 5.1% year-over-year; subscription and licensing revenue grew 1.9%.

Outlook and guidance

• Q2 2026 revenues expected to decline at a slightly higher year-over-year rate than Q1, with adjusted EBITDA margins expected to decline similarly; EPS to benefit from continued share repurchases.

• Targeting a return to year-over-year revenue growth in the second half of 2026, with Q4 stronger than Q3.

• Fiscal 2026 guidance is deferred due to ongoing portfolio review and the pending Connectivity divestiture.

• Management highlights risks related to macroeconomic uncertainty, inflation, interest rates, and the successful completion of the Connectivity divestiture.