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Ziff Davis (ZD) Q3 Earnings Meet Estimates, Revenues Fall Y/Y
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Ziff Davis (ZD - Free Report) reported adjusted earnings of $1.58 per share in third-quarter 2022, which met the Zacks Consensus Estimate and increased 6% year over year.
Revenues totaled $341.9 million in the quarter, which missed the Zacks Consensus Estimate by 2.01% and declined 3.7% from the year-ago quarter. The fall in Ziff Davis’ total revenues is due to a loss in the advertising business segment.
Quarter in Detail
Advertising revenues of $187 million (54.7% of total revenues) declined 6% year over year. The current global supply-chain disruptions and rising inflation impacted Ziff Davis’ clients negatively and reduced their advertising budgets.
The net retention rate of 94.1% in the third quarter declined from the year-ago quarter’s rate of 114.1%. The total number of advertisers improved 2.4% to 1,953 in the third quarter. Quarterly revenue per advertiser declined 8.1% year over year to $95.7 million.
Subscription revenues of $143 million (41.8% of total revenues) increased 5.9% year over year. The total number of subscribers improved 33.2% to 3050 in the third quarter. Average quarterly revenue per subscriber, however, decreased 20.7% year over year to $46.87 million.
Digital Revenues of $263.7 million (77.1% of total revenues) increased 0.6% from the year-ago period’s number.
Cybersecurity and Martech revenues of $78.2 million (22.9% of total revenues) decreased 15.8%.
Ziff Davis, Inc. Price, Consensus and EPS Surprise
Adjusted non-GAAP sales and marketing, and general & administrative expenses contracted 60 basis points (bps) and 80 bps to 5.4% and 8.2%, respectively, from the corresponding year-ago quarter’s readings. Adjusted research, development & engineering expenses also contracted 30 bps to 8.8%.
In the third quarter, adjusted EBITDA increased 0.3% to $120.1 million from the year-ago quarter’s level.
Balance Sheet and Cash Flow
As of Sep 30, 2022, cash, cash equivalents and investments were $801 million compared with $849.3 million as of Jun 30, 2022.
Cash flow from operations was $100.7 million in the third quarter compared with the second-quarter 2022 cash flow of $76 million.
As of Sep 30, 2022, total gross debt was $1.01 billion compared with $1.11 billion as of Jun 30, 2022.
Guidance
For 2022, ZD expects total revenues of $1.390-$1.4 billion. Adjusted EBITDA is expected between $507 million and $513 million.
For the full year, Ziff Davis expects adjusted earnings per share between $6.70 and $6.80.
Zacks Rank & Stocks to Consider
Ziff Davis currently has a Zacks Rank #3 (Hold).
ZD’s shares have fallen 33.4% against the Zacks Computer and Technology sector’s decline of 63.1% in the year-to-date period.
Here are some better-ranked stocks in the broader sector.
TME shares have lost 43.3% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 33.7%.
The Trade Desk(TTD - Free Report) has a Zacks Rank #2 at present.
TTD shares have lost 52.6% in the year-to-date period compared with the Zacks Internet - Services industry’s decline of 41.1%.
Agilent Technologies (A - Free Report) has a Zacks Rank #2 at present.
Agilent Technology shares have lost 13.1% in the year-to-date period compared with the Zacks Electronics - Testing Equipment industry’s decline of 20.3%.
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Ziff Davis (ZD) Q3 Earnings Meet Estimates, Revenues Fall Y/Y
Ziff Davis (ZD - Free Report) reported adjusted earnings of $1.58 per share in third-quarter 2022, which met the Zacks Consensus Estimate and increased 6% year over year.
Revenues totaled $341.9 million in the quarter, which missed the Zacks Consensus Estimate by 2.01% and declined 3.7% from the year-ago quarter. The fall in Ziff Davis’ total revenues is due to a loss in the advertising business segment.
Quarter in Detail
Advertising revenues of $187 million (54.7% of total revenues) declined 6% year over year. The current global supply-chain disruptions and rising inflation impacted Ziff Davis’ clients negatively and reduced their advertising budgets.
The net retention rate of 94.1% in the third quarter declined from the year-ago quarter’s rate of 114.1%. The total number of advertisers improved 2.4% to 1,953 in the third quarter. Quarterly revenue per advertiser declined 8.1% year over year to $95.7 million.
Subscription revenues of $143 million (41.8% of total revenues) increased 5.9% year over year. The total number of subscribers improved 33.2% to 3050 in the third quarter. Average quarterly revenue per subscriber, however, decreased 20.7% year over year to $46.87 million.
Digital Revenues of $263.7 million (77.1% of total revenues) increased 0.6% from the year-ago period’s number.
Cybersecurity and Martech revenues of $78.2 million (22.9% of total revenues) decreased 15.8%.
Ziff Davis, Inc. Price, Consensus and EPS Surprise
Ziff Davis, Inc. price-consensus-eps-surprise-chart | Ziff Davis, Inc. Quote
Adjusted non-GAAP sales and marketing, and general & administrative expenses contracted 60 basis points (bps) and 80 bps to 5.4% and 8.2%, respectively, from the corresponding year-ago quarter’s readings. Adjusted research, development & engineering expenses also contracted 30 bps to 8.8%.
In the third quarter, adjusted EBITDA increased 0.3% to $120.1 million from the year-ago quarter’s level.
Balance Sheet and Cash Flow
As of Sep 30, 2022, cash, cash equivalents and investments were $801 million compared with $849.3 million as of Jun 30, 2022.
Cash flow from operations was $100.7 million in the third quarter compared with the second-quarter 2022 cash flow of $76 million.
As of Sep 30, 2022, total gross debt was $1.01 billion compared with $1.11 billion as of Jun 30, 2022.
Guidance
For 2022, ZD expects total revenues of $1.390-$1.4 billion. Adjusted EBITDA is expected between $507 million and $513 million.
For the full year, Ziff Davis expects adjusted earnings per share between $6.70 and $6.80.
Zacks Rank & Stocks to Consider
Ziff Davis currently has a Zacks Rank #3 (Hold).
ZD’s shares have fallen 33.4% against the Zacks Computer and Technology sector’s decline of 63.1% in the year-to-date period.
Here are some better-ranked stocks in the broader sector.
Tencent Music Entertainment Group (TME - Free Report) has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
TME shares have lost 43.3% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 33.7%.
The Trade Desk(TTD - Free Report) has a Zacks Rank #2 at present.
TTD shares have lost 52.6% in the year-to-date period compared with the Zacks Internet - Services industry’s decline of 41.1%.
Agilent Technologies (A - Free Report) has a Zacks Rank #2 at present.
Agilent Technology shares have lost 13.1% in the year-to-date period compared with the Zacks Electronics - Testing Equipment industry’s decline of 20.3%.