Ziff Davis Q3 2026 Earnings Call Transcript

Ziff Davis (NASDAQ:ZD) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.

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View the webcast at https://events.q4inc.com/attendee/516793776

Summary

Ziff Davis reported Q3 2026 revenues of $289.3 million, down from $306.5 million in Q3 2025, with adjusted EBITDA of $82.2 million, reflecting a decline from the previous year.

The company repurchased over a quarter billion dollars in stock, reducing shares outstanding by nearly 14%, and ended the quarter with a strong cash position of $1.5 billion.

The Tech & Shopping segment showed a narrowing revenue decline, while social commerce efforts such as the RetailMeNot app showed strong growth.

Gaming & Entertainment revenues declined slightly but showed potential for future growth with upcoming game releases like GTA 6.

Health & Wellness faced a revenue decline due to lower professional advertising, but consumer pharma advertising was strong.

Cybersecurity & Martech revenues declined slightly, but some areas like SMTP.com and IPVanish showed strong growth.

AI initiatives have contributed significantly to operational efficiency, with over 90% of new code being AI-written, reducing costs and supporting a broader product roadmap.

Future guidance suggests a sequential revenue increase in Q4 2026 but a year-over-year decline, with a focus on maintaining strong profitability and free cash flow.

Management emphasized the importance of aligning with trusted brands and diversifying revenue streams beyond traditional web traffic.

Full Transcript

Mike (Operator)

Good day, ladies and gentlemen, and welcome to the Ziff Davis third quarter 2026 earnings conference call. My name is Mike, and I will be the operator assisting you today. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. On this call will be Vivek Shah, CEO of Ziff Davis, and Brett Richter, Chief Financial Officer of Ziff Davis.

I will now turn the call over to Brett Richter, Chief Financial Officer of Ziff Davis. Thank you. You may begin.

Brett Richter (Chief Financial Officer)

Thank you. Good morning, everyone, and welcome to the Ziff Davis investor conference call for the third quarter of fiscal year 2026. As the operator mentioned, I am Brett 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. This presentation and our earnings release are available on our website, www.ziffdavis.com. You can also 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 presentation, we’ll be conducting a Q&A. The operator will provide instructions 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 may 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 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 slideshow for the webcast.

We refer you to discussions in those documents regarding safe harbor language and forward-looking statements. In addition, our slides include reconciliation statements for non-GAAP measures to their nearest GAAP equivalent. Now let me turn the call over to Vivek for his remarks.

Vivek Shah (Chief Executive Officer)

Thank you, Brett, and good morning, everyone. We delivered third quarter results that were broadly in line with the expectations we set during our second quarter call. Revenues and adjusted EBITDA grew sequentially, and our adjusted EBITDA margin improved by 160 basis points as compared to the last quarter. So while the headwinds facing our businesses persist, we’re encouraged by our sequential growth as we continue to focus on ways to create value for our shareholders.

Year to date, we have deployed more than a quarter billion dollars to repurchase our stock at attractive valuations and have reduced our shares outstanding by nearly 14%. We continue to maintain a strong balance sheet, exiting the third quarter with $1.5 billion of cash and investments and a net cash position in excess of half a billion dollars. We continue to be careful and opportunistic capital allocators while also considering monetization opportunities to unlock value for our shareholders.

As I’ve said before, we see our portfolio as dynamic, and every decision we take is measured against its impact on value per share. Now I’d like to share some observations about our four operating segments. Tech and Shopping revenues declined less than 4% year over year, consistent with our goal for revenue trends to improve each quarter through year-end. This is the third straight quarter the rate of decline narrowed, from 18% in Q4 2025 to 13% in Q1, 5% in Q2, and just under 4% in Q3. We anticipate this improving trend will continue into the fourth quarter, which is historically the largest quarter of the year for Tech and Shopping.

Our social commerce efforts continue to ramp nicely, and we relaunched the RetailMeNot app in the third quarter as a loyalty-first experience built around guaranteed cash back, verified promo codes, and extensive product deals. Signed-in monthly users have more than doubled, and app commissions reached a 2026 high in September, up 25% year over year. While our Tech and Shopping brands continue to face the strongest search traffic headwinds in our portfolio, we’ve been able to counter those pressures by expanding our ad surfaces, building direct audiences, and leveraging our trust and authority to our benefit.

Gaming & Entertainment revenues declined about 2% year over year, with lower advertising revenues at IGN being offset by growth in our Humble Bundle storefront. The gaming ad market has been weak due to a light slate in the run-up to this month’s launch of GTA 6. We expect the slate to improve going into next year, which should support the gaming ad market in 2027. While the ad market for IGN has been soft, it continues to lead at the biggest events in the industry.

At San Diego Comic-Con, IGN led media outlets with a record 196 million video views, up 65% year over year. At Gamescom, the industry’s largest international showcase, IGN once again was the official production and media partner, creating week-long programming, including livestreams localized in German, Chinese, and Japanese. The Humble business has been growing its volume of bundle offerings, including expanding into tabletop games and comics, delivering a record third quarter in revenue.

Our charitable giving grew along with revenue, bringing our total cumulative gross donations to over $280 million. In Health & Wellness, revenues declined 9.5% against a relatively strong third quarter last year. The year-over-year drop was due primarily to lower healthcare professional–focused advertising at MedPage Today, where, as we noted last quarter, we’re seeing spend shift to some emerging platforms. However, as we expected, MedPage grew sequentially over Q2, and we expect this sequential growth to continue through the end of the year. Consumer pharma advertising was stronger in Q3, with continued momentum in GLP-1 promotion for both diabetes and weight loss indications.

Importantly, our consumer pharma commercialization business expanded its healthcare media network with the addition of a long-term exclusive contract with Harvard Health Publishing, which will join our existing roster of world-class partners including the Cleveland Clinic, Mayo Clinic, and University of Pittsburgh Medical Center, which was added earlier this year. Our continuing medical education business, Prime, received the prominent industry award Best in Class Outcomes at the 2026 Alliance Industry Summit Annual Meeting for a transformative initiative addressing critical healthcare gaps in underserved populations.

At Lose It!, we introduced The Lab, a new premium offering that pairs our AI-powered food logging with health metrics and nutrition insights, giving members a more personalized view of their progress and giving us a stronger upsell path within our subscription base. In Cybersecurity & Martech, revenues declined 4.6% due primarily to weakness in our SEO tools and email marketing businesses. Other Martech businesses performed well in the quarter. SMTP.com, our API-based email delivery platform supporting marketing, newsletter, and transactional use cases, continues to grow at a double-digit rate, as does Symantec Labs, which helps subscription businesses acquire customers efficiently online. In Cybersecurity, our consumer businesses, led by the IPVanish brand, continue to deliver strong growth.

That momentum reflects a balanced go-to-market approach across direct-to-consumer and partner channels along with continued product improvement. In October, we added a next-generation antivirus to IPVanish, bringing more of consumers’ privacy and security needs together in a single service. Turning to our AI initiatives, last quarter I noted that the majority of the new or updated code we release is written by AI. Today, more than 90% of pull requests across the product and engineering teams are written by AI. The result is a lower cost per feature delivered and a leaner cost base with the capacity to support a broader product roadmap without growing headcount at the same pace. Increasingly, AI is showing up in what our customers experience, from AI-assisted shopping search on RetailMeNot’s app to AI-powered nutrition insights at Lose It!.

Beyond engineering, we’re applying AI across operations, customer support, and sales, where we’re seeing gains in throughput. More broadly, we’re very focused on efficiency and margin improvements at the company, and by the end of the year we estimate headcount will be down 10%. While AI has helped improve our operating efficiency, the disruption of search traffic by Google and LLMs has been a clear business headwind. Organic Google referrals to our properties declined approximately 37% year over year in the third quarter. Last year, the Q3 drop in referrals was approximately 23%, making the two-year drop over 50%. There are differences in categories; as I noted, Tech and Shopping experienced sharper drops than Gaming & Entertainment, for instance.

Google has also started to share a statistic called AI impressions, which measures how many times a link to a page was shown inside generative AI features across our digital media sites. Our content was cited in AI Overview and AI Mode responses roughly 2.7 billion times in the quarter, nearly 10 times the clicks those same sites received from Google Search. It’s clear that our content has significant value to users, even though we’re seeing a major reduction in referral traffic from search.

As such, we’ll continue to focus on extracting appropriate value for intellectual property wherever it’s used, while continuing to diversify our revenues beyond search traffic. Looking ahead, we believe Ziff Davis is in a strong financial position, with a substantial cash balance, strong underlying free cash flow generation, and four profitable segments built on trusted, category-leading brands. We will stay disciplined and patient, opportunistically buying back our stock and pursuing acquisitions where we believe the potential returns are compelling, continuing to adapt our businesses to how our audiences find and engage with our high-quality content.

We believe this approach positions us well to keep creating value for shareholders, and with that, let me hand the call back to Brett.

Brett Richter (Chief Financial Officer)

Thank you, Vivek. Let’s discuss our financial results. Our earnings release reflects both our GAAP and adjusted financial results for Q3 2026. My commentary will primarily relate to our Q3 2026 adjusted financial results for continuing operations and their comparisons to the relevant prior period. Our results from continuing operations in prior periods exclude the results of the Connectivity Division, the sale of which was completed in Q2 2026. Please see Slide 4 for the summary of our Q3 2026 financial results.

Q3 2026 revenues were $289.3 million as compared with revenues of $306.5 million for Q3 2025. Q3 2026 adjusted EBITDA was $82.2 million as compared with $97.8 million for the prior year period. Our adjusted EBITDA margin for the quarter was 28.4% compared with an adjusted EBITDA margin of 31.9% in Q3 2025. As Vivek noted, these results are broadly in line with the Q3 2026 expectations we provided on our earnings call last quarter. Q3 2026 adjusted diluted EPS was $1.39 compared to $1.40 in the prior year period, reflecting in part our active share repurchase activity.

Slide 5 reflects performance summaries for our two primary sources of revenue: advertising and performance marketing, and subscription and licensing. Q3 2026 advertising and performance marketing revenues declined 7.7% compared to the prior year period, while subscription and licensing revenues were lower by 2.7%. Other revenues were up almost 30%, increasing by $1 million year over year in Q3 2026 due in part to the contribution of Symantec Labs in our MarTech group.

Slides 6 through 9 reflect the Q3 financial results of each of our four reportable segments. Tech and Shopping adjusted EBITDA margins declined year over year due in part to a revenue mix shift related to the shift from organic web towards social media. However, Q3 2026 margins were slightly improved as compared with Q2 2026. Gaming and Entertainment adjusted EBITDA margins were lower year over year due to several factors including revenue mix and an increase in custom event and activation programs, which generally have lower margins than traditional display and video.

Health and Wellness adjusted EBITDA margins were lower, primarily reflecting lower revenues due in particular to the drop in pharma advertising at our professional businesses that Vivek noted earlier. And in our Cybersecurity and MarTech segment, adjusted EBITDA margins were down only slightly from the prior year period. Please refer to Slide 10 as we review our balance sheet. As of the end of Q3 2026, we had $1.4 billion of cash and cash equivalents and approximately $100 million of long-term investments. As of September 30, 2026, gross leverage was 2.5 times trailing 12 months adjusted EBITDA, and our cash and cash equivalents exceeded our outstanding debt balances by $535 million. In the third quarter, we paid approximately $55 million of the approximately $200 million in tax obligations related to the connectivity transaction, and we expect the vast majority of the remaining payments to be settled by the end of the first quarter of 2027.

As we noted last quarter, we are exploring ways to positively impact our aggregate tax obligations, including through the use of investment tax credits. Earlier this month we satisfied the maturity of our 1.75% coupon convertible notes, paying approximately $150 million including accrued interest. Our next significant outstanding debt maturity is in March 2028. Slide 11 shows the historic change in our share counts since the end of 2022. During the third quarter of 2026 we continued to deploy capital through share buybacks, repurchasing 1.7 million shares under a 10b5-1 plan. We deployed $92 million related to share repurchases in the quarter. Since the start of 2026, we have repurchased 5.5 million shares, reducing the share count year to date by nearly 14%. The total amount currently available for repurchase under our Board’s current buyback authorization is approximately 6 million shares.

We spent $7 million related to prior period acquisitions during the third quarter of 2026 and year to date we have deployed a total of $16.2 million to support our M&A activities. We have ample cash at present to deploy in support of our capital allocation priorities, but we remain disciplined about valuation. As Vivek noted, we continue to seek opportunities to add businesses at attractive prices which we believe offer the potential for strong risk-weighted cash-on-cash returns.

Now I’d like to offer some insight related to our current financial performance expectations for the fourth quarter of 2026. Revenues in Q4 are expected to increase sequentially by a double-digit percentage and decline low- to mid-single digits year over year. This should reflect a year-over-year rate of decline that is similar to, if not better than, the decline we experienced in Q3 2026. Our adjusted EBITDA margin percentage is expected to increase sequentially but is expected to decline as compared with the prior year period to the low to mid-30s.

We expect adjusted diluted EPS to be up slightly year over year, reflecting the benefit of the year-over-year reduction in shares outstanding due to our active buyback program. Turning now to our supplemental information, Slide 14 provides a summary of our adjusted results from continuing operations for each quarter and the full year 2025 as well as the first three quarters of 2026. Slides 15 through 18 show reconciliation statements for the various non-GAAP measures to the nearest GAAP equivalents. Slide 19 includes a reconciliation of free cash flow from continuing and discontinued operations. Free cash flow in the third quarter of 2026 was negative $100.1 million, down from positive $108.2 million in Q3 2025.

Note that the prior period figure includes the connectivity business. As we noted last quarter, our conversion rate of adjusted EBITDA to free cash flow in the second half of 2026 is being negatively impacted by estimated tax payments, professional fees, and certain other items associated with the sale of the connectivity business. During the third quarter of 2026, these items reduced our free cash flow by approximately $90 million and by approximately $100 million on a year-to-date basis.

Excluding these items, trailing 12 months transaction-adjusted free cash flow, a supplemental measure which we reconcile in our earnings release and presentation, was $208.5 million. Excluding these and similar discrete items, going forward, we expect continuing strong LTM free cash flow conversion of our adjusted EBITDA. As we manage through the continued transition of the digital media landscape and the impacts of AI, protecting our profitability is a priority for us. As Vivek discussed earlier, we believe that we can achieve this in part through our use of AI across the organization. However, we are also employing disciplined cost management throughout our businesses, including targeted spending cuts and increased operating efficiencies. This is in part why our margins improved sequentially this quarter, and we plan to maintain this disciplined approach going forward.

As we look ahead to the end of the year and into 2027, our primary financial objectives remain unchanged: maintaining strong profitability, generating robust free cash flow, targeting investments to improve our growth trajectory, and working to highlight and realize the intrinsic value of our portfolio. And with that, I will now ask the operator to rejoin us to instruct you on how to queue for questions.

Mike (Operator)

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we begin.

Our first questioner is Shampatel with Sigma.

Shyam Patil (Analyst at SIG)

Okay. Good morning, Vivek and Brett. Thanks for taking my questions. I have a couple. The first one, Vivek, could you talk a little bit more as to why drops in your traffic aren’t resulting in correspondingly large drops in revenue? And then I have a follow-up.

Vivek Shah (Chief Executive Officer)

Yeah, no, so it’s a great question. So as we said, organic Google traffic was down 37% in the quarter, but then company revenues were down a little under 6%, which is a reminder that not all of the businesses in our portfolio rely on Google traffic. We have subscription businesses, we have app businesses, we have newsletter businesses. And so the portfolio continues to be fairly diversified even with the disposition of connectivity. That’s something to remind folks, which is, you know, connectivity was a large and growing business within our portfolio that had very little exposure to Google search.

But even with its disposition, we still maintain a pretty diversified portfolio. And what I’d also say is that even where Google traffic has been most important and where it’s been most impacted, and Tech and Shopping would be at the top of that list, we have narrowed the decline three quarters in a row from minus 16% to under 4%. And then obviously as we go forward we start to lap some of those earlier quarters. And so I think that’s evidence that the offsets that we’ve talked about in the past are working: social commerce, video licensing, the RetailMeNot app, which I talked about in the prepared remarks, direct audiences.

And so look, I think our position is we’re not planning on a search recovery and in fact are operating with the view that referrals are going to continue to come down. But I think we’re managing that as well as you can.

Shyam Patil (Analyst at SIG)

Thank you, that’s very helpful. And you also mentioned something very interesting on the call. You said that, I believe you said something like your content is mentioned almost 3 billion times in AI overviews and AI mode, which obviously points to the tremendous value of your content. Just wondering, how do you plan to, or how do you think you guys can extract, you know, more monetary value from that over time?

Vivek Shah (Chief Executive Officer)

Yeah, look, so that statistic is new. It comes from Google’s Google Search Console. So this comes from Google and it’s a really useful statistic for the reasons you just said, which is the citation number and the AI impressions number does demonstrate how relevant our content is to AI answers both to Google in terms of locating and using sources and then obviously the user being on the other end of the query or the search. And as we know, Google is seeing a significant growth in their query volume.

I believe this is their print or in their last call. I think query volume is at a five-year high. So the user is on the other side of that. Our content is an incredibly important input. Monetizing that relevance is the priority. And so simply, we remain open to signing licensing deals which would be a method in which we can extract value out of the use of our content within these systems. I do think our litigation with OpenAI will bring clarity around this, you know, this area and subject, and that hopefully can move things along. At the same time, look, I think that, you know, it’s the fact that we are so well cited shows our trust, and marketers are increasingly factoring AI visibility into kind of the media partners they pick.

So that’s sort of a more near term and kind of direct connection between the relevance. But look, we need to get value for our contributions. And so I think the great news is that, you know, as you’d expect, brands like ours and content like ours do well within these systems. But yes, there is a gap between usage and monetization.

Shyam Patil (Analyst at SIG)

Thank you. Thank you, Brett.

Brett Richter (Chief Financial Officer)

Thank you.

Mike (Operator)

Our next questioner is Ron Joosse with Citi.

Jake Hallock (Analyst at JP Morgan)

Hi, this is Jake Hallock on for Ron. Thanks for taking our questions. First on gaming and entertainment, Humble continues to perform well. Revenue per customer was up and, with GTA launching in a couple of weeks, curious how you’re thinking about IGN advertising and Humble through the fourth quarter, and what does a strong blockbuster window historically do for that segment?

Vivek Shah (Chief Executive Officer)

Historically it’s very good. And I think what’s happened is, just to maybe expand a little bit on the dynamics, as I think you may know, GTA has been delayed multiple times. And I think one of the things that has happened is other IP kind of doesn’t want to compete with it. And so as it delayed, it delayed. And so I think the entire gaming slate was pretty weak for the last year, more than the last year. And so the theory and the hope and the expectation ultimately is that with GTA being launched, and that’s now a hard launch and it’s, you know, we’re talking in a couple of weeks, that more IP will come out.

And as more IP comes out, there’s more marketing support for that IP. So the issue we have at IGN generally is a demand issue, it’s not a supply issue. Meaning, yes, there are—so I should point this out. The single largest property from a search referral point of view is actually IGN. But it’s also amongst the properties that held up well because a lot of its search referral is around game help, which is very maps heavy. So game maps, that’s a very hard thing to necessarily replicate. So we do get a lot of direct traffic.

The other thing I’ll point out just in terms of the IGN monetization model is it’s more heavily video, vertical video and social video than it is even web traffic. So it’s ironic that even though the Google referrals hold up there, a lot of the monetization is around video content which is not Google Search related. And so this does become a demand issue, it’s not a supply-side challenge, which is what we’ve had more in tech and shopping. And so, look, you know, it’s always hard to predict. I would say that it’s probably more into 2027. I think you’re going to start seeing—and there are dates now on a bunch of IP that we can point to—and as those games launch, those will unlock marketing dollars.

Jake Hallock (Analyst at JP Morgan)

Thanks, that’s helpful. And then just a quick one on the AI initiatives that you highlighted. Could you just talk to us about what you’re seeing in productivity and product velocity, and then how are you thinking about balancing reinvestment with letting that leverage flow through to margin into ’27? Thanks.

Vivek Shah (Chief Executive Officer)

Yeah, no, listen, it’s a great question, and you take a step back. Having done something like 90 acquisitions over the years at Ziff Davis, we have accumulated a fair amount of tech debt and we view the role of AI in eradicating that debt as being pretty exciting. And we’re seeing it—I’ll use Humble as a great example. We are days away from relaunching the Humble platform, which needed it. There are elements in the platform that interfered with conversions and customer experience that we think the new platform will address and help ultimately accelerate growth.

This had been, frankly, a multi-year project that, in a matter of months, has been brought to completion—actually kind of restarted and done within a matter of months. And so, from my point of view, this—you know, tech debt exists in different pockets at different levels within different businesses. But our ability to address that debt, which then allows us to speed features and product development—and the speeding of features and product development should generate top-line growth: new ways in which we can engage with audiences and customers, new products. But at the same time, look, I think we want some portion of that to address the margin challenges that we have.

Brett talked a little bit about that in his prepared remarks, but we are very focused on margin expansion within the company. We have made a little bit of progress in Q3, but we need to make more. So I think it’s a mix. I think it’s how do we leverage AI for efficiencies. I mentioned, you know, we’re going to exit the year with 10% less headcount. That’s not all AI—I won’t say that—but it’s a good portion of what we’re working on. So, look, I think it’s a mix. I think it’s a case-by-case assessment.

Jake Hallock (Analyst at JP Morgan)

All right, thanks a lot, Vivek.

Vivek Shah (Chief Executive Officer)

Thank you.

Mike (Operator)

We now have Rishi Jaluria with RBC.

Rishi Jaluria (Analyst at RBC Capital Markets)

Oh, wonderful. Hey Vivek, thanks so much for taking my questions. Maybe I want to start with, you know, continuing on the SEO versus, you know, AI Search you’re showing. Look, I think we all see the industry-wide issues that are going on with SEO. At the same time, you’re clearly getting a good amount of mix with Overview-driven traffic. You know, maybe—maybe can you talk about, number one, how should we be thinking about that mix shift dynamic, and is there an element in which, you know, overall kind of impressions actually starts to go a little bit more favorable to you because of, you know, how much referrals from Overview is kind of working in your favor? And maybe just number two, can you talk about—you know, you talked a little bit about some of the vertical video and all that kind of stuff—but where are you seeing the most traction from off-platform monetization to help offset some of those headwinds?

And I’ve got a quick follow-up.

Vivek Shah (Chief Executive Officer)

Yeah, no, look, so you know, I think we, you know, in previous calls we gave a framework where we said something like roughly a third of revenues depended on web traffic, and Search was roughly 40% of that traffic. And we’re not updating that split every quarter. And it’s changed because, obviously, with Connectivity—the sale of Connectivity pushes it up mechanically because that wasn’t really web driven. But, you know, lower Search referrals have pushed it back down, but I guess the direction is the same.

You know, it’s all about developing new ad surfaces and monetization. And I would say that, you know, two areas in particular have been green shoots. So social platforms in general, both for vertical video but also for affiliate commerce—that’s been a more recent unlock. So vertical video has been, you know, an important part, particularly of IGN’s business model that we’re bringing to other of the digital media businesses and seeing some early success there.

But what is new, generally speaking—this comes more out of our tech and shopping business—is leveraging social platforms for commerce, for affiliate commerce. Historically we were very web dependent for affiliate commerce, and now social presents itself. Obviously we’re trying to stimulate growth within the app experience at RetailMeNot. So I think those things are quite interesting. And then the other thing to just point out is, you know, growth in kind of the non-advertising portions of our business. That’s where a Lose It becomes important, and that’s where a Humble becomes important, and that’s where an IPVanish becomes important. And those businesses are doing well in this market environment. So, look, I mean, I think that, you know, we’ve got a number of different irons in the fire, which I think is important, and we’re seeing green shoots in some of them.

And so this is a, you know, this is a little bit of a balancing act as we continue to see. And, look, I do continue to believe Search referrals will go down. That is what we’re seeing. We obviously see—I gave in my prepared remarks—an acceleration in that decline. And so we’re planning around that, and I think as we manage these other pieces, both the diversification in business models but also the diversification within monetization and audience on the media side, I think we get through this reasonably well.

Rishi Jaluria (Analyst at RBC Capital Markets)

Got it. No, thanks, Vivek. That’s really helpful. Maybe just on the health and wellness side—you know, I think we can all tell there’s clearly a lot of maybe disruptive but maybe, you know, additive potential for the healthcare industry as a result of AI. You talked a little bit about kind of the drop in subscription customers, you know, and some of the higher operators in health and wellness. Can you maybe talk a little bit about, you know, kind of what’s going on there and where are there opportunities?

You know, you’ve mentioned leveraging AI in Lose It. But maybe to double down on the transformational potential of AI in health care, especially to, you know, the provider side of the equation, maybe can you just walk us through your efforts there? Thanks.

Vivek Shah (Chief Executive Officer)

Yeah, no, look, we’re very excited. So the main, you know, subscription business is Lose It. By the way, you’ll see something in the quarterly statistics around subscribers. Just to be clear, Lose It used to sell what they called lifetime subscriptions. It was one price, a higher price point that was meant to exceed LTV. We’ve suspended that practice, and so we are no longer selling lifetime subscriptions in any meaningful way, if at all. I think, you know, from our point of view, building a renewable base is important and extending LTV by bringing in features like AI logging and the Lab. And just to explain that: logging is one of the main issues with all of these types of apps. Creating an ability to take a picture and log instead of typing in, we think, is a big improvement in the user experience and reduces friction. And when you reduce friction and you make it easy for people to log, they’re going to continue to log.

So as we’re seeing improved logging, we’re seeing improved retention, at which point LTVs go up. So that’s one. Two, what the Lab is designed to do is essentially be an AI-driven nutritionist in your pocket, where now that you’ve done logging, we’re able to use our database, we’re able to understand how other customers are experiencing different consumption, and able to bring in, you know, other sort of health metric data into the app, or maybe other third parties, to start to give you more of a nutritionist-type experience where you’re getting insight and you’re getting advice.

Those are all examples of, again, using AI technology to improve the experience—improving the experience to drive LTV. When we drive LTV, it opens up our marketing allowable so we can start to spend. We have stopped spending into Lose It subscriptions almost entirely, relying on organic. You need to, I think, to drive growth, invest in marketing. So that’s kind of how that all works on the consumer side. And, look, I do think we’re excited for what that is.

And a lot of the challenges within that segment are on the professional side; they really aren’t on the consumer side. So I mentioned Lose It. But there’s also, on the pharma commercialization side, on the consumer side, you know, we’re seeing real positive signs. And the Harvard Health deal, which I mentioned, is a big deal for us. And so we now represent Cleveland Clinic, Mayo Clinic, Harvard, you know, University of Pittsburgh Medical Center. These are titans within the health care ecosystem, and we’re their exclusive advertising monetization partners. And so we look to expand that too.

Rishi Jaluria (Analyst at RBC Capital Markets)

Very helpful, thank you.

Vivek Shah (Chief Executive Officer)

Thank you.

Mike (Operator)

Our next questioner is Robert Kulbris with Evercore.

Robert Kulbris (Analyst at Evercore)

Great, thanks very much. I think, you know, others in the category have established that, you know, non-session-based revenue could potentially get up to around half of total revenue—you know, sort of similar business mix. So just wonder if you could maybe talk to that: you know, where you are on that curve today in terms of efforts to diversify the revenue streams, maybe get away from, you know, session-based revenue. And where do you think that could go?

And I have a couple follow-ups. Thank you.

Vivek Shah (Chief Executive Officer)

Well, yeah, Rob, so I mean, it’s sort of what I was talking about with Rishi, which is, you know, we’ve said in the past like a third of the revenue depends on web traffic. So we’re a little bit different, I think, than other players in that we have a lot of non sort of media, non-traffic businesses. You know, I mentioned a bunch of those. So look, I think that that’s a little bit of a difference in what we’re doing. And then I think what I think, you know, the majority of even our web businesses are today not traffic dependent.

So I think we’ve been diversified and we’ve been that way for a while. And again, I think it’s the way I would look at it is it’s social. So that’s, you know, Instagram, Facebook, Snap, TikTok. It’s YouTube, which is an incredibly important platform. It’s Inbox — by that I mean email. There may be notifications and messaging elements as well. There’s app, so meaning mobile app. There’s browser extension even, which we have within our shopping business. These are like when we sort of talk about non-web or what you refer to as non-sessions, I think those are the panoply of things in which all of our brands are at various levels of success in adoption.

Robert Kulbris (Analyst at Evercore)

Got it. The mitigation playbook which you’re rolling out sounds like quite successfully. You know, there are areas where that hasn’t been fully deployed where there could be an opportunity to do more, areas maybe where frankly because of, you know, demographics or other factors, you just haven’t felt the need yet to deploy that mitigation playbook.

Vivek Shah (Chief Executive Officer)

No, absolutely. I mean, I would tell you that if you go across the portfolio in each of the segments, I feel like each segment is strongest in one of those. And the real, real opportunity here is to make all segments strong in all of those. And so we have a lot of effort around knowledge sharing, playbook sharing, and making sure, and even moving people around to bring some velocity to where we see performance gaps. And we do see performance gaps, to be perfectly honest.

But to me that’s the opportunity — to close those performance gaps so that, you know, the businesses that have figured out, for instance, how to leverage social platforms for commerce, that’s really only happening in one business, you know, and then we have some businesses that are in one segment, we have some businesses that are doing some smart, interesting custom content work, but again, not happening in other places. So look, the good news is that the opportunities exist. I’m not known for my patience. And so, you know, what we need to do is move things along, and we are doing concrete things within the company to do that.

Brett Richter (Chief Financial Officer)

And maybe I’ll just add the mitigation playbook goes beyond the advertise, the revenue diversification within advertising. We were a business prior to the connectivity sale that was approaching 50% subscription licensing revenue. We, you know, part of subscription licensing revenue is still material for the overall enterprise. We made the determination to execute on the connectivity transaction as a play in the mitigation playbook, overall mitigation of the value of the company in the public markets and to recapture a gap between trading value and intrinsic value.

Our capital allocation strategy and investing our stock is part of the mitigation playbook. I think we have a lot of tools and of course, Vivek, the other aspect in the mitigation playbook is managing the bottom half of the income statement and our expenses. So I mean, I think we have a lot of actions that are underway. We’re obviously fighting some of these broad pressures in the market for traditional web and traditional traffic. But, you know, we’re running a lot of different places.

Robert Kulbris (Analyst at Evercore)

One last one for you. Just wanted to ask on any impressions you have around iOS 26, some of the changes made there in the Safari browser. Do you view those as a potential opportunity? Do advertisers need to spend more time and money with endemic websites directly versus using programmatic audience extension, given some of the changes we’re seeing in the market? Thank you.

Vivek Shah (Chief Executive Officer)

Yeah, I mean, even without the iOS change, I think generally we’re seeing more of an interest in aligning with trusted brands in contextual content. This is where I think a lot of marketers want the strong AI visibility players to align with, because there’s a different issue, which is how much AI slop is in the ecosystem that is getting essentially monetized with programmatic ads. So even when you get away from maybe some of the difficulties that the iOS change will create around behavioral advertising and targeting, I also think there’s just an environmental question that a lot of marketers have, which is, hey, where are my ads running and what is it against? And, you know, that’s always existed, I guess, in digital advertising, but I think becomes more acute.

So generally speaking, yes, I do think that aligning with trusted brands and creating programs that are well beyond spots and dots on webpages, which is a lot of what we do within CNET as the market leader in tech and IGN as a market leader in gaming and, well, you know, Everyday Health is a market leader in health and in pharma — I mean, that’s what we attempt to do. And I do think that can only help.

Robert Kulbris (Analyst at Evercore)

Got it. Thank you very much.

Vivek Shah (Chief Executive Officer)

Thank you.

Mike (Operator)

We now hear from Brian Smilek with JP Morgan.

Vivek Shah (Chief Executive Officer)

Yeah, no, thanks for asking the question. Look, the connectivity sale I think demonstrated that we’re going to act when the market undervalues a business. And I think the market is undervaluing all of the businesses collectively and then the businesses individually. So we will continue to evaluate opportunities, and really it’s kind of simple. Every decision is measured against sort of the impact on our share price, right. So this is value per share.

And we saw that the connectivity transaction had a meaningful impact on Ziff Davis stock price. And so, you know, look, we’re open to dialogue, we’re going to do things as long as it creates value. But what we’re not going to do is do it to get cash. We don’t need cash right now, but we do need share value growth. So to me, I am — and we are — acutely focused on the per share price of Ziff Davis. And if we believe a transaction has a positive impact on that, we will entertain that transaction.

Mike (Operator)

We now have Steven Ju with UBS.

Steven Ju (Analyst at UBS)

Okay, thanks, guys. Hi, Vivek. Hi, Brett. Welcome. Yeah, thank you. I was wondering if you can help us think through — because it feels like some of the structural pressures on the business, you know, should be coming off because as painful as some of the declines from Google search traffic has been in the past, it sounds like that has largely de-indexed as a contributor. So even if it continues to decline, it’s not going to affect you as meaningfully going into the future.

So that’s, I guess, one vector to think about. And then I guess among sort of the advertising verticals that you have, can you talk about some of the pressures that you might have seen in the background and where that ends up six months, 12 months from now? Because, I mean, bringing up the gaming and entertainment segment, I think nobody wants to be there ahead of GTA, but it seems like the sector itself had probably a lot of rationalization in terms of content development over the last several years.

So maybe there’s less marketers there. So can you talk about, on a vertical-by-vertical basis, where you are in terms of that vertical-specific rationalization and where we are on the path to start seeing the total dollars in advertising start to recover? Thanks.

Vivek Shah (Chief Executive Officer)

Yeah, no, it’s great, and I’m glad you asked to do it vertical by vertical because often that’s the most productive way to start to think about our company. So I’ll start with tech and shopping. As I said, you know, the loss is narrowing, so your calculation is right that the, you know, the challenges should start to mitigate and the opportunities to start to add up and get to a positive growth perspective. I’m not going to be in the prediction business right now.

We’re quarter to quarter in our commentary. But again, the direction there I think looks pretty good. On the gaming entertainment side, as you just rightly pointed out, it’s a little bit of a sector issue and, you know, how much more content rationalization and how is the underlying health of the video game industry going to play out is a big factor on the gaming entertainment piece. If you’re on the side of, hey, things are going to start to improve going into 2027, that’ll be good. If you say, hey, there’s another year or another few quarters of rationalization, look, we’re going to still be, you know, muddling as we’re doing right now.

I think on the health and wellness side, for us it’s actually — we’ve got a little bit of a structural issue on the MedPage side where clearly we’re getting, you know, we’re losing share, and, you know, that’s not because physician engagement is low. Physician engagement with MedPage remains really strong. But, and we’re doing things to expand into new distribution channels, things like, you know, getting integrated in EHRs at point of care. But there we’re seeing some competitive tension.

Having said all of that, the pharma side of it, the consumer pharma side of it, looks very good. So I think it’s an interplay between those two things, right? Can consumer pharma outrun what’s happening on the direct-to-provider side and then obviously Loses It and some of the other non-pharma businesses. So look, I think that the way I would characterize it all without making a prediction as to when the inflection point is — is directionally everything seems in the right direction but nothing’s up, right, in aggregate. And that, you know, we obviously understand that, and we’re doing everything we can to point the company back to growth.

Steven Ju (Analyst at UBS)

Thank you.

Vivek Shah (Chief Executive Officer)

Thank you.

Mike (Operator)

With no remaining questions in the queue, I turn the floor back over to your call hosts for closing remarks.

Vivek Shah (Chief Executive Officer)

Thank you, Mike. And of course, thanks, everybody, for your continued interest, your continued investment, and for joining us today on our call. We look forward to wrapping up 2026, heading into 2027, engaging with you in this interim period, and then hosting you all again when we announce our year-end results.

Mike (Operator)

Thank you. This does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation. Goodbye.

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