Ziff Davis (NASDAQ: ZD) reported Q2 2026 revenue from continuing operations of $286.7 million, down 2.7% from $294.8 million a year earlier, while diluted EPS from continuing operations swung to a loss of $1.43 from earnings of $0.34. A $54.8 million goodwill impairment drove the GAAP operating loss, while adjusted diluted EPS increased 13.2% as the weighted average share count declined. The Connectivity sale also materially increased liquidity, and reported cash flow improved on a combined continuing- and discontinued-operations basis.
Core earnings data
Revenue declined as lower Technology & Shopping and Health & Wellness sales outweighed modest growth in the other two segments. The goodwill impairment was the largest factor behind the reported operating loss; mechanically excluding that charge, operating income would have been approximately $10.1 million, still below $13.8 million in the prior-year quarter.
Adjusted EBITDA and its margin also declined slightly. Adjusted net income was nearly flat, but adjusted diluted EPS increased because earnings were spread across fewer shares.
| Metric | Q2 2026 | Q2 2025 | Year-over-year change |
|---|---|---|---|
| Revenue | $286.7 million | $294.8 million | -2.7% |
| Operating income (loss) | $(44.7) million | $13.8 million | Not meaningful |
| Operating margin | (15.6)% | 4.7% | -20.3 percentage points |
| Net income (loss) from continuing operations | $(52.2) million | $14.3 million | Not meaningful |
| Diluted EPS from continuing operations | $(1.43) | $0.34 | Not meaningful |
| Adjusted EBITDA / margin | $76.8 million / 26.8% | $79.8 million / 27.1% | -3.7% / -0.3 points |
| Adjusted net income / diluted EPS | $37.8 million / $1.03 | $38.1 million / $0.91 | -0.6% / +13.2% |
| Operating cash flow / free cash flow | $89.0 million / $54.0 million | $57.1 million / $26.9 million | +55.9% / +100.3% |
The income-statement figures above reflect continuing operations. Operating cash flow and free cash flow include both continuing and discontinued operations, limiting direct comparison with continuing-operations earnings.
Business and segment performance
Technology & Shopping and Health & Wellness produced the quarter’s revenue contraction. Gaming & Entertainment and Cybersecurity & Martech grew, but only marginally and not enough to offset the declines elsewhere.
| Segment revenue | Q2 2026 | Q2 2025 | Year-over-year change |
|---|---|---|---|
| Technology & Shopping | $76.7 million | $80.8 million | -5.0% |
| Gaming & Entertainment | $46.6 million | $46.2 million | +0.9% |
| Health & Wellness | $94.7 million | $99.5 million | -4.8% |
| Cybersecurity & Martech | $68.7 million | $68.3 million | +0.5% |
The two declining segments lost approximately $8.9 million of combined revenue, while the two growing segments added about $0.8 million. Ziff Davis did not provide segment profit figures or specific explanations for these revenue movements in the release.
Profitability, cash flow, and the balance sheet
Direct costs increased to $45.7 million from $40.7 million even as revenue declined, contributing to pressure on underlying profitability. Sales and marketing expense fell to $122.2 million from $127.0 million, while depreciation and amortization declined to $46.9 million from $50.3 million. The $54.8 million noncash goodwill impairment was the main difference between the adjusted and GAAP pictures.
The sale of Connectivity substantially changed the reported results and balance sheet. Connectivity was classified as discontinued operations for every period presented, and discontinued operations generated Q2 net income of $676.6 million. As a result, total company net income was $624.5 million despite the $52.2 million continuing-operations loss; total net income therefore does not represent the performance of the remaining businesses.
Ziff Davis received approximately $1.18 billion in cash at closing from the sale, or $1.13 billion net of cash divested, with another $37.0 million held in escrow. Cash and cash equivalents reached $1.61 billion at June 30, 2026, up from $573.8 million at December 31, 2025. During the quarter, the company used $121.5 million for share repurchases and approximately $9.2 million for current- and prior-year acquisitions.
A smaller share count lifted adjusted EPS despite flat adjusted earnings
Adjusted net income declined 0.6%, but adjusted diluted EPS rose 13.2%. The difference reflects a substantially smaller denominator: weighted average diluted shares fell approximately 12.9% to 36.38 million from 41.75 million.
The reduced share count was consistent with Ziff Davis’ repurchase activity, including $121.5 million deployed in Q2. This means the quarter’s adjusted per-share growth came primarily from capital allocation rather than growth in adjusted earnings.
Management’s view
CEO Vivek Shah emphasized the Connectivity sale, share repurchases, and free cash flow as the principal factors supporting Ziff Davis’ financial position. Management said its priority is to deploy capital strategically to maximize long-term shareholder returns, making the use of the company’s larger cash balance a central issue after the divestiture.
Recent insider transactions
The provided insider data show 168,499 shares purchased across 16 transactions and 36,737 shares sold across six transactions over the last six months. That represents net purchases of 131,762 shares across 22 total transactions; total insider holdings were reported at 1.27 million shares, with net purchases equal to 11.60% of those holdings.
The latest reported transactions consist of six direct sales followed by four derivative-security exercises. These records are presented objectively and do not by themselves establish insiders’ views of the company’s outlook.
| Date | Insider and role | Transaction | Ownership | Reported value |
|---|---|---|---|---|
| June 10, 2026 | Bret Richter, CFO | Sale at $46.88 per share | Direct | $843,840 |
| June 8, 2026 | Kirk P. McDonald, Director | Sale at $46.65–$46.66 per share | Direct | $50,150 |
| June 5, 2026 | Jeremy D. Rossen, General Counsel | Sale at $47.00 per share | Direct | $376,000 |
| June 3, 2026 | Jana Barsten, Director | Sale at $45.00 per share | Direct | $150,615 |
| June 2, 2026 | William Brian Kretzmer, Director | Sale at $44.51 per share | Direct | $87,596 |
| May 28, 2026 | Jeremy D. Rossen, General Counsel | Sale at $45.75 per share | Direct | $198,875 |
| May 7, 2026 | Scott Carey Taylor, Director | Derivative-security exercise at $43.31 per share | Direct | $342,279 |
| May 7, 2026 | Sarah Ann Fay, Director | Derivative-security exercise at $43.31 per share | Direct | $342,279 |
| May 7, 2026 | Kirk P. McDonald, Director | Derivative-security exercise at $43.31 per share | Direct | $342,279 |
| May 7, 2026 | Neville R. Ray, Director | Derivative-security exercise at $43.31 per share | Direct | $342,279 |
Risks investors should monitor
- Contraction in major revenue categories: Technology & Shopping and Health & Wellness both declined by roughly 5%, more than offsetting the limited growth in the other two segments.
- Underlying margin pressure: Even before considering the goodwill impairment, adjusted EBITDA fell and its margin narrowed. Higher direct costs alongside lower revenue warrant attention in subsequent quarters.
- Limited visibility into standalone cash generation: Q2 operating cash flow and free cash flow include discontinued operations, so they do not isolate the cash performance of the remaining Ziff Davis portfolio.
- Dependence on capital allocation for per-share growth: Adjusted EPS increased while adjusted net income declined slightly. If repurchases slow, future per-share growth will depend more heavily on operating earnings.
- Execution following the Connectivity divestiture: The sale created substantial liquidity, but future returns will depend on how effectively Ziff Davis deploys that capital through repurchases, acquisitions, or other strategic actions.
Summary
Ziff Davis’ Q2 2026 results showed modest revenue and adjusted EBITDA pressure in the continuing business, with a goodwill impairment producing a sizable GAAP loss. The Connectivity sale transformed the balance sheet and generated substantial reported income from discontinued operations, while repurchases helped adjusted EPS grow despite nearly flat adjusted earnings. The next areas to monitor are revenue stabilization in the two declining segments, standalone cash generation after the divestiture, and the deployment of the company’s expanded cash balance.
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