Ziff Davis Reports 2025 Results, Underlining Segmental Struggles and Cash Flow Resilience

What happened

Ziff Davis announced unaudited financial results for the fourth quarter and full year 2025, likely confirming the trends observed through the first nine months. Revenue growth is estimated around 5.6% for the year, driven by strong performances in Health & Wellness and Connectivity segments, which offset weaknesses elsewhere. However, Cybersecurity & Martech and parts of Technology & Shopping continue to face structural challenges, with operating losses and goodwill impairments eroding overall profitability. Free cash flow remains robust, near $260 million annually, funding aggressive share repurchases that have reduced the share count by about 7-8% over the past year. Despite this, the company's mid-single-digit growth trajectory and mixed segment outcomes underscore its reliance on capital returns rather than operational excellence.

Implication

For investors, Ziff Davis's 2025 results reinforce a cautious outlook: the stock trades at distressed multiples (6.0x EV/EBITDA) due to persistent weakness in Cybersecurity & Martech and Technology & Shopping, which could lead to further impairments. Strong free cash flow and a solid balance sheet provide downside protection, but growth remains modest, relying heavily on buybacks for EPS support. Upside potential hinges on management executing portfolio optimizations, such as divestitures of lagging segments, to unlock value and reinvest in higher-return areas. If 2026 guidance indicates revenue growth below 3% or EBITDA stagnation, the bear case becomes more probable, pressuring the stock toward $32. Conversely, successful restructuring or improved segment performance could drive the stock toward the bull case target of $46, but this requires tangible action beyond current rhetoric.

Thesis delta

The thesis remains unchanged but with heightened urgency: Ziff Davis's value creation still depends on stabilizing underperforming segments and sustaining aggressive buybacks, as evidenced by the 2025 results. However, if the full-year data reveals deeper-than-expected declines in Cybersecurity & Martech or slower cash flow growth, it could shift the probability toward the bear scenario, necessitating a reassessment of entry points.