Ziff Davis ( ZD Quick Quote ZD - Free Report) delivered adjusted earnings of $1.58 per share in second-quarter 2022, which beat the Zacks Consensus Estimate by 6.76% and improved 12.1% year over year.
Revenues totaled $337.4 million in the quarter, which missed the Zacks Consensus Estimate by 4.56%. The top line improved 2.2% from the year-ago quarter’s figure. Low growth in Ziff Davis’ total revenues is due to a loss in the advertising business segment.
Quarter in Detail
Advertising revenues of $189 million (56% of total revenues) declined 5% year over year. The current global supply-chain disruptions impacted Ziff Davis’ clients negatively and reduced their advertising budgets.
Net retention rate of 99.6% in the second quarter of 2022 declined from the year-ago quarter’s rate of 111.2%. Total number of advertisers improved 5.4% from the year-ago quarter’s level to 2,016 advertisers in the second quarter. Quarterly revenue per advertiser declined 9.5% year over year to $93.848 million.
Subscription revenues of $138 million (40.9% of total revenues) increased 10.4% year over year. Total number of subscribers improved 2.3% from the year-ago quarter’s number to 2,393 subscribers in the second quarter. Average quarterly revenue per subscriber improved 8.4% year over year to $57.64 million.
Digital Revenues of $258.4 million (76.6% of total revenues) increased 2.2% from the year-ago period’s number.
Cybersecurity and Martech revenues of $79 million (23.4% of total revenues) increased 3.7% from the year-ago period’s figure.
Adjusted non-GAAP sales and marketing, and general & administrative expenses contracted 50 bps and 90 bps each to 0.7% and 3.1%, respectively, from the corresponding year-ago quarter’s readings. Adjusted research, development & engineering expenses expanded 40 bps to 9.6% from the year-ago quarter’s number.
In the second quarter, adjusted EBITDA increased 5.3% to $118 million from the year-ago quarter’s level.
Balance Sheet and Cash Flow
As of Jun 30, 2022, cash, cash equivalents and investments were $849.3 million compared with $988.7 million as of Mar 31, 2022.
Cash flow from operations was $76 million in the second quarter compared with first-quarter 2022 cash flow of $116.5 million.
As of Jun 30, 2022, total gross debt was $1.11 billion compared with $1.13 billion as of Mar 31, 2022.
For 2022, ZD expects total revenues of $1.41-$1435 billion. Adjusted EBITDA is expected between $507 million and $509 million.
For the full year, Ziff Davis expects adjusted EPS between $6.57 and $6.77.
Zacks Rank & Stocks to Consider
Ziff Davis currently has a Zacks Rank #4 (Sell).
ZD’s shares have returned 27.3% against the Zacks
Computer and Technologysector’s decline of 23.6% in the year-to-date period.
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