Ziff Davis Posts EPS Rebound as Revenue Declines
Free cash flow doubled from a year earlier to $54.0 million.
Ziff Davis Inc. (ZD), a digital-media company, returned to adjusted earnings growth in the second quarter as adjusted diluted earnings rose 13.2% to $1.03 a share, reversing the first quarter’s decline.
The improvement came during a reshaping of the business. Ziff Davis completed the Connectivity divestiture for about $1.216 billion in total proceeds, including $1.134 billion in cash net of cash divested, after operating the unit while the transaction remained pending in the first quarter.
Revenue fell 2.7% from a year earlier to $286.7 million, a steeper decline than the first quarter’s 1.9% drop, though it increased about 7.1% sequentially. Adjusted net income slipped 0.6% from a year earlier to $37.8 million after declining 16.5% in the first quarter.
Technology & Shopping revenue declined 5.0% to $76.7 million, an improvement from its 12.9% first-quarter drop. Gaming & Entertainment grew 0.9%, slowing from 7.2%, while Health & Wellness fell 4.8% after edging higher in the prior quarter.
Adjusted EBITDA declined 3.7% to $76.8 million, compared with an 11.2% first-quarter drop. Its margin narrowed 0.3 percentage point to 26.8%, a smaller contraction than the 2.5-point decline in the prior period, and expanded 3.1 points sequentially.
GAAP operating results swung to a $44.7 million loss from first-quarter income of $2.9 million, principally reflecting a newly recognized $54.8 million goodwill impairment. The charge was assigned entirely to Health & Wellness, which posted a $42.3 million operating loss compared with income of $16.0 million a year earlier.
Cash and cash equivalents climbed to $1.606 billion at June 30 from $573.8 million at year-end, largely following the Connectivity sale. Ziff Davis increased second-quarter share repurchases to $121.5 million from $51.6 million in the first quarter, bringing first-half buybacks to $173.1 million.