Ziff Davis (ZD) Q4 2024 earnings summary

Executive summary

• FY 2024 revenue grew 2.8% to $1.40 billion, with Q4 revenue up 5.9% to $412.8 million; adjusted diluted EPS rose 6.9% to $6.62 and adjusted EBITDA increased 2.3% to $493.5 million.

• Q4 adjusted EBITDA was $171.8 million, up 2.5% year-over-year; Q4 adjusted diluted EPS was $2.58, up 10.7%.

• 2024 marked a return to growth and record free cash flow since the 2021 spinoff, despite Q4 revenue falling short of internal estimates due to underperformance in Humble Games and connectivity.

• New reporting structure expanded from two to five segments: Technology & Shopping, Gaming & Entertainment, Health & Wellness, Connectivity, and Cybersecurity & Martech.

• Net income for Q4 increased 1.0% to $64.1 million; full-year net income up 51.9% to $63.0 million, despite a significant goodwill impairment.

Financial highlights

• Q4 adjusted EBITDA margin was 41.6%; full-year margin was 35.2%.

• Free cash flow for FY 2024 was $283.7 million, up 34.3% year-over-year; Q4 free cash flow nearly doubled to $131 million.

• Advertising and performance marketing revenue grew 10.6% in Q4 and 4.1% for the year; subscription and licensing revenue grew 0.9% in Q4 and 1.9% for the year.

• Net advertising revenue retention improved to 92% in Q4 2024 from 87.1% in Q4 2023.

• Q4 operating income margin was 19.0%; full-year margin was 8.1%.

Outlook and guidance

• FY 2025 revenue guidance midpoint is $1.472 billion (5.0% growth), with a range of $1.44–$1.50 billion (2.9%–7.2% growth).

• Adjusted EBITDA guidance midpoint is $523 million (6.0% growth), with a range of $494–$542 million (2.3%–9.8% growth).

• Adjusted diluted EPS guidance midpoint is $6.96 (5.1% growth), with a range of $6.64–$7.28 (0.3%–10.0% growth).

• Expect mid-single-digit ad growth, low to mid-single-digit subscription/licensing growth, and low teens growth in other revenue.

• Adjusted EBITDA margin expected to improve slightly to 35.5% in 2025; Q1 2025 expected to be muted, with stronger growth in the second half.