Breaking Down Ziff Davis, Inc. (ZD) Financial Health: Key Insights for Investors

You're looking at Ziff Davis, Inc. (ZD) and trying to figure out if the market is missing something, especially with the stock trading where it is, and honestly, you have a point. The company just reaffirmed its full-year 2025 guidance, projecting revenues between $1,442 million and $1,502 million, which is a solid anchor in a choppy digital media space. Here's the quick math: that revenue range translates to an Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization-a good proxy for operating cash flow) of up to $542 million, showing real operational efficiency. Plus, in Q3 2025 alone, Ziff Davis generated a robust $108.2 million in free cash flow, giving them serious flexibility for their ongoing share repurchase program, which deployed $44.4 million that quarter. But still, the big question is how to value a company that's actively exploring the sale of entire divisions-a clear opportunity to defintely unlock value, but also a near-term risk that creates uncertainty for investors who prefer a clean, predictable narrative.

Revenue Analysis

You're looking for a clear picture of what's actually driving Ziff Davis, Inc. (ZD)'s top line, and the story for 2025 is one of modest overall growth masking significant shifts beneath the surface. The company is guiding for full-year 2025 revenue to land near the midpoint of its range at $1.47 billion, a slight miss of analyst expectations in Q3, but still a positive trajectory. The trailing twelve months (TTM) revenue as of Q3 2025 was $1.46 billion, reflecting a 5.70% year-over-year increase.

In Q3 2025, Ziff Davis, Inc. (ZD) reported quarterly revenues of $363.7 million, marking a 2.9% increase from the prior year period, which is the fifth consecutive quarter of growth. This growth is coming from two distinct revenue models, showing where management is placing its bets:

• Advertising and Performance Marketing: Revenue grew 5.9% year-over-year in Q3 2025, showing strong demand for its audience-driven media properties.
• Subscription and Licensing: Revenue grew a more conservative 2% year-over-year in Q3 2025, highlighting the stable, recurring nature of this segment, which includes businesses like Ookla and Downdetector.

Here's the quick math: the faster growth in advertising revenue is definitely pulling the overall rate up, but the subscription base provides a crucial floor of predictable income. That's a good balance.

Segment Contribution and Near-Term Risks

The company's new segment reporting provides a clearer view of performance, and it reveals a divergence in growth. The Health & Wellness segment is a clear standout, while the legacy Tech & Shopping division is facing headwinds. This is where the near-term risk lies: navigating the impact of search volatility and the rise of AI overviews (Generative AI search results) on web traffic, which primarily affects their content-driven segments.

The segment performance in Q3 2025 tells the real story about where the momentum is:

What this estimate hides is the strategic decision to wind down the game publishing business, which is the main reason for the revenue drop in Tech & Shopping. That's a planned decline, not a systemic failure. The fact that Health & Wellness grew by 12.7% to $102.3 million in Q3 2025 shows a successful pivot toward high-demand, high-margin verticals. The company is actively exploring opportunities to unlock shareholder value, including the potential sale of entire divisions, which could dramatically reshape this revenue breakdown in 2026. For a deeper dive into the company's long-term goals, you should review the Mission Statement, Vision, & Core Values of Ziff Davis, Inc. (ZD).

Profitability Metrics

You need to know if Ziff Davis, Inc. (ZD) is turning its high revenue into real bottom-line profit, and the 2025 data shows a mixed, but generally strong, picture: exceptional gross margins are offset by volatility in net income due to non-operating costs. The company's Trailing Twelve Months (TTM) Gross Margin of 86.4% is a world-class figure, but the Net Margin of 4.57% tells a story of significant operating expenses and charges that you must watch closely.

For the full 2025 fiscal year, management reaffirmed guidance targeting GAAP revenue between $1.44 billion and $1.50 billion. Here's the quick math: taking the midpoint of $1.47 billion and the TTM Gross Margin of 86.4% suggests a Gross Profit of roughly $1.27 billion. That's an incredible level of efficiency in their cost of goods sold (COGS), which is typical for a digital media and software-heavy business.

The gap between the Gross Margin and the operating and net figures is where the risk lies. Your focus should be on the cost management within the operating expenses (OpEx) and non-cash charges.

Operational Efficiency and Profitability Trends

Ziff Davis, Inc. (ZD)'s operational efficiency (Operating Margin) is a clear strength, standing at a TTM of 14.03%. This is a massive lead over a diversified media peer like Warner Bros. Discovery, which reported a TTM Operating Margin of only 3.73%. This spread highlights ZD's success in its vertical focus areas like Health & Wellness and Connectivity, which showed strong growth in Q3 2025.

Still, the trend in net profitability has been volatile. While the company achieved a Net Income of $46.98 million over the first nine months of 2025, reflecting a positive swing from a net loss in the prior year, the quarterly results are less consistent. For example, Q2 2025 GAAP Net Income was $26.3 million, but Q3 2025 saw a GAAP Net Loss of $3.6 million. This dip, despite a Q3 revenue of $363.71 million, is mostly due to higher interest expenses and non-cash charges like depreciation and amortization, which fall below the operating line. You defintely need to factor in these non-core charges when assessing true earnings quality.

• Gross Margin is elite, signaling low COGS.
• Operating Margin is robust, showing strong core business control.
• Net Income volatility is driven by non-operating charges.

The core business is healthy, but the capital structure (debt and amortization from acquisitions) is pressuring the bottom line. For a deeper look into the capital allocation strategy, including the significant share repurchase program, check out Exploring Ziff Davis, Inc. (ZD) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You need to know how Ziff Davis, Inc. (ZD) funds its growth, because a smart capital structure is a firewall against market volatility. The good news is that ZD maintains a relatively conservative debt-to-equity (D/E) ratio, signaling a preference for equity and retained earnings over heavy borrowing.

As of the most recent quarter in 2025, ZD's total debt sits at approximately $896.34 million, with the bulk of that being long-term debt in the mid-$860 million range. This means the short-term debt component is small, which is defintely a positive for immediate liquidity. Total shareholder equity is strong, around $1.8 billion. That's a healthy cushion.

Here's the quick math on their leverage:

• Total Debt-to-Equity Ratio: 0.47
• Industry Average (Advertising/Media): ~0.79

A D/E ratio of 0.47 is well below the industry benchmark of roughly 0.79 for diversified media and advertising companies. This low ratio tells you ZD uses less debt to finance its assets compared to its peers, reducing financial risk. They aren't over-leveraged for a company in a high-growth sector. The company's credit profile reflects this stability; S&P Global Ratings affirmed ZD at a BB long-term credit rating with a stable outlook in June 2025.

ZD is not just sitting on old debt; they are actively managing it. In a key move in July 2024, the company executed a significant debt exchange to push out maturities. They issued $263 million in new 3.625% Convertible Senior Notes due 2028, which replaced $400.9 million of the older 1.75% notes that were due in 2026. This strategic refinancing extended the maturity timeline by two years and, importantly, reduced the total principal amount of convertible notes outstanding by paying out about $135 million in cash. This is a clear action to de-risk the near-term balance sheet.

The company balances its capital structure by using debt for strategic, large-scale financing, but relies heavily on its strong Free Cash Flow (FCF) for ongoing growth and shareholder returns. For example, in Q3 2025 alone, ZD deployed approximately $44.4 million on share repurchases and another $16.7 million on tuck-in acquisitions. This mix shows a commitment to using cash flow to directly return capital to shareholders while funding smaller, accretive acquisitions. They use their balance sheet to manage large liabilities and their cash flow to drive near-term value. You can see how this strategy aligns with their broader objectives in their Mission Statement, Vision, & Core Values of Ziff Davis, Inc. (ZD).

The table below summarizes the core debt figures from their 2025 financial disclosures:

Your next step is to reconcile this low-leverage profile with their potential for growth, especially considering their ongoing strategic review to evaluate the sale of entire divisions.

Liquidity and Solvency

You want to know if Ziff Davis, Inc. (ZD) can cover its near-term bills and whether its cash engine is running smoothly. The short answer is yes: the company's liquidity position is defintely strong, driven by a highly cash-generative business model, but you still need to understand how their non-traditional balance sheet affects the standard ratios.

The standard liquidity metrics for Ziff Davis, Inc. (ZD) look healthy, especially for a digital media company with minimal inventory. As of the end of Q3 2025, the Current Ratio and Quick Ratio were both approximately 1.59. Since the Quick Ratio (which excludes inventory) is essentially the same as the Current Ratio, it confirms that their current assets are highly liquid, primarily cash and receivables. A ratio above 1.0 means they have more than enough liquid assets to cover all short-term liabilities.

Here's the quick math on their short-term strength:

• Current Ratio: 1.59 (Strong, showing short-term coverage).
• Quick Ratio: 1.59 (Confirms assets are highly liquid, no reliance on inventory).
• Net Debt to Adjusted EBITDA: 0.5x (Extremely low leverage, signaling high solvency).

What this estimate hides is the negative Net Current Asset Value (NCAV) of approximately $-553.48 million on a trailing twelve-month basis. This is common for service-based digital companies; they often carry large deferred revenue liabilities (money collected upfront for services not yet delivered) or high accounts payable, which inflates current liabilities without a corresponding physical asset like inventory. The key takeaway is to prioritize the cash flow statement over a strict NCAV analysis for Ziff Davis, Inc. (ZD).

Cash flow statements show a clear trend of improving cash conversion throughout 2025. Net cash provided by operating activities (OCF) accelerated significantly: $20.6 million in Q1 2025, rising to $57.1 million in Q2 2025, and jumping to $138.3 million in Q3 2025. This strong operating cash flow generation is the true source of Ziff Davis, Inc. (ZD)'s financial strength and its primary liquidity buffer.

The company is actively deploying this cash through both investing and financing activities, which is a sign of confidence and a clear capital allocation strategy. Year-to-date through Q3 2025, Ziff Davis, Inc. (ZD) has deployed approximately $67.3 million for acquisitions and spent about $113.2 million on share repurchases. This capital deployment is manageable because the full-year 2025 Free Cash Flow (FCF) is estimated to be around $290 million, with a Trailing Twelve Months FCF of $261.2 million as of Q3 2025.

The table below breaks down the cash flow trends:

There are no immediate liquidity concerns; Ziff Davis, Inc. (ZD) has a solid cash balance of around $623 million and a low debt-to-EBITDA ratio. The biggest strength is the predictable, subscription-heavy revenue model that converts quickly to cash. To dig deeper into who is driving these decisions, you should read Exploring Ziff Davis, Inc. (ZD) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking at Ziff Davis, Inc. (ZD) and trying to figure out if the market is giving you a deal or setting a trap. My quick take: Ziff Davis looks undervalued on a fundamental basis, but the stock price trend shows a deep lack of investor confidence that you can't ignore.

The core valuation ratios for the 2025 fiscal year paint a compelling picture of cheapness. The Price-to-Earnings (P/E) ratio is projected at just $10.8x$, which is low for a digital media company, especially when their earnings per share (EPS) is projected to hit $2.77$ for 2025. That P/E is defintely attractive. Also, the Price-to-Book (P/B) ratio sits at an extremely low $0.64x$, meaning the company is trading for significantly less than the value of its assets minus liabilities.

Here's the quick math on enterprise value: The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is projected at only $2.93x$ for 2025. This metric, which is a cleaner measure of a company's operating performance relative to its total value (including debt), suggests Ziff Davis is trading at a steep discount compared to most peers in the Communication Services sector. For context, their Q2 2025 Adjusted EBITDA was $107.7$ million, showing consistent cash-generating power. The numbers say it's cheap.

But still, the stock price action over the last year has been brutal. The stock has plummeted by 46.61% over the last 12 months, with the latest closing price near $31.81$ as of November 2025. The 52-week high was $60.62$, and the 52-week low was $28.55$, so the stock is bumping along the bottom of its recent range. The market is telling you there are risks here, likely tied to their revenue growth trajectory or segment performance, which you should explore further in Exploring Ziff Davis, Inc. (ZD) Investor Profile: Who's Buying and Why?

When it comes to returning capital, Ziff Davis, Inc. does not currently pay a dividend, so you won't see a dividend yield or payout ratio. They favor share repurchases, which is another way to return value to shareholders, especially when the stock is this cheap.

What this estimate hides is the analyst sentiment, which is cautious. The consensus rating from analysts is a Hold, with an average 12-month price target of $37.00$. This target implies an upside of about 16.32% from the current price, suggesting that while the stock is not a screaming Buy, analysts see a clear path for the price to recover to a more reasonable valuation.

• P/E Ratio (2025 est.): $10.8x$
• P/B Ratio (2025 est.): $0.64x$
• EV/EBITDA (2025 est.): $2.93x$
• 12-Month Price Change: Down 46.61%
• Analyst Consensus: Hold

Risk Factors

You're looking at Ziff Davis, Inc. (ZD) and trying to map the near-term risks to your investment thesis, and honestly, the market has already priced in a lot of concern. The biggest issue isn't a single catastrophic event, but a persistent, structural headwind in digital media: the shift in search traffic and the reliance on inorganic growth.

The company's financial health, while stable in terms of liquidity with a current ratio of 1.59, still carries a warning sign. For example, the Altman Z-Score of 1.7 places Ziff Davis in the distress zone, which is a red flag for potential financial challenges ahead. Plus, the stock's high beta of 2.23 means you should expect significant volatility. This is defintely not a stock for the risk-averse investor.

External and Industry-Specific Risks

The core external risk is the changing digital distribution landscape, specifically from giants like Google. This is a clear operational threat to their digital content properties, a risk that has driven the share price down sharply-a 46% year-to-date decline as of November 2025.

• AI Overviews and Search Volatility: The growing influence of AI overviews in search results is a major concern, as it threatens to disintermediate (cut out the middleman) ZD's content sites. Management has tried to quantify this, stating that less than 15% of overall revenue comes from search-related traffic, but the market is still worried.
• Digital Advertising Headwinds: Persistent weakness in the broader digital advertising market challenges their monetization model. This is a sector-wide issue, but it hits ZD hard because their business model, as a vertically focused digital media company, depends on it.

Operational and Financial Risks

The internal risks are largely tied to their growth strategy. Ziff Davis is a strong free cash flow (FCF) generator, with Q3 2025 FCF at $108.2 million, but that cash flow is masking a fundamental operational challenge: a lack of organic (internal) growth.

The company is reliant on tuck-in acquisitions to drive top-line growth. This means their revenue growth is inorganic, and integrating those new businesses introduces execution risk. In fact, organic growth was negative at -3% in Q1 2025.

Here's the quick math on their 2025 guidance, which is now tracking toward the lower end of the range, an important sign of softening momentum:

You also need to watch the segment-specific weakness. The Tech & Shopping segment saw a 2% revenue drop and a 12% decline in adjusted EBITDA in Q3 2025. You can't ignore that kind of underperformance in a key division.

Mitigation Strategies and Clear Actions

Management is not sitting still; they are taking clear, aggressive steps to address the valuation disconnect and structural risks. The key action here is the strategic review of the business.

• Strategic Review: The company has engaged outside advisors to evaluate value-creating opportunities, including the potential sale or spin-off of entire divisions. This signals they are willing to break up the company to realize intrinsic value, which analysts believe is significantly higher than the current market cap.
• Aggressive Share Buybacks: They are actively using their strong FCF to repurchase shares. In Q3 2025 alone, ZD repurchased 3 million shares, deploying $109 million, which is nearly 85% of year-to-date free cash flow. This is a direct way to boost earnings per share (EPS) and signal management confidence.
• AI Integration: ZD is leveraging AI to enhance products and operational efficiency, particularly in high-growth areas like the Health & Wellness segment, which saw a strong 13% revenue growth in Q3 2025. This is a strategic pivot to reduce reliance on traditional search traffic.

If you want to dig into the full financial picture, you can check out Breaking Down Ziff Davis, Inc. (ZD) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for where Ziff Davis, Inc. (ZD) will find its next gear, and the answer is a disciplined focus on high-margin, sticky businesses, plus a smart use of Artificial Intelligence (AI). The company isn't chasing low-quality revenue; it's doubling down on its most profitable segments while aggressively returning cash to shareholders.

For the full fiscal year 2025, Ziff Davis, Inc. has reaffirmed its revenue guidance, projecting between $1.44 billion and $1.5 billion, with the analyst consensus sitting right in the middle at about $1.47 billion. While top-line growth is modest, the real story is the earnings power: the average analyst forecast for 2025 earnings is a solid $277,640,240. Here's the quick math: the company is generating strong free cash flow, which is driving a massive share buyback program, shrinking the share count and boosting your per-share returns.

Key Growth Drivers and Strategic Moves

The company's growth isn't a single lever; it's a portfolio of vertical businesses, and some are outperforming the others. The Health & Wellness segment is a standout, delivering a 13% year-over-year revenue growth and an 18% jump in adjusted EBITDA in the third quarter of 2025. The Connectivity division, which includes Ookla's Speedtest, is also accelerating, with year-to-date growth of 7% and expected low double-digit growth moving forward. The Cybersecurity & Martech segment has also returned to growth, which is defintely a positive sign.

The strategic blueprint for 2025 is clear, focusing on three core actions:

• AI-Driven Product Innovation: Launched proprietary AI platforms, HALO and IMAGINE, to improve ad targeting and audience insights, which helped fuel a 15.5% year-over-year increase in advertising revenue in Q2 2025 in certain segments.
• Tuck-in Acquisitions: Invested $70 million in Mergers and Acquisitions (M&A) in the first nine months of the year, completing key acquisitions like Well+Good (Health & Wellness) and Forensic and Compliance Systems (Cybersecurity & Martech) in Q2 2025.
• Aggressive Capital Return: Deployed $109 million, or nearly 85% of year-to-date free cash flow, on share repurchases by the end of Q3 2025. That's a serious commitment to shareholder value.

Competitive Edge and Near-Term Risks

Ziff Davis, Inc.'s main competitive advantage is its portfolio of high-authority brands (like PCMag and Mashable) that collectively boast a robust gross margin of 86.4%. The Connectivity segment is particularly strong, with a subscription and licensing revenue model that provides a recurring, stable cash flow from over 25,000 enterprise customers. You can see more about the investor base in Exploring Ziff Davis, Inc. (ZD) Investor Profile: Who's Buying and Why?

Still, you have to be a realist about the risks. The biggest near-term challenge is search volatility and the growing influence of AI overviews, which is impacting web traffic, particularly in the Tech & Shopping segment. This is why the company is exploring a broader strategic review, including potential divestitures or a sale of certain businesses, to close the gap between its intrinsic value and its current market capitalization.

For a clearer picture of the segment performance driving these numbers, here's a look at the Q3 2025 results: