Investment Case Update: March 20, 2026
Price: $42.26 (3/20/26)
Market Capitalization: $1.6B
Enterprise Value: $1.9B
What the Company Does
Ziff Davis is a digital media and internet investment company targeting the technology, shopping, entertainment, and health verticals. Between 2012 and 2023, management invested over $3 billion in 80 companies globally through a value-oriented M&A process. The company’s Digital Media segment operates a portfolio of web properties and apps including CNET, PCMag, Mashable, RetailMeNot, and IGN, which provide product reviews, discounts, news and commentary related to specific vertical markets. ZD then sells advertisements to marketers wishing to target the audiences of these owned-and-operated platforms, as well as for third-party sites and email marketing efforts. ZD’s Cybersecurity & Martech segment offers subscription-based software-as-a-service (SaaS) solutions to businesses and consumers.
Why We Own It
ZD trades near an all-time low valuation, despite a robust balance sheet and improving growth prospects. Management has an established record of profitable growth, boosting revenues between the end of 2016 and the end of 2021 at a compound annual growth rate of nearly 14% while maintaining Adjusted EBITDA margins north of 40% over this period (vs. 34% in FY25), before spinning off its cloud fax business in October 2021 (now Consensus Cloud Solutions (ticker: CCSI)). Although revenue declined modestly between 2022-2023 on advertising headwinds and an unusually low amount of acquisitions, top-line growth has since resumed at a low single-digit pace over the last 2 years, with Adjusted EBITDA dollars stabilizing and beginning to grow, even with margins below prior peaks, providing a runway for further improvement. Over the long term, management still expects double-digit total top-line growth, with equal contributions from organic and inorganic (e.g. M&A) opportunities, along with mid-30s Adjusted EBITDA margins and double-digit EPS growth.
Despite robust profitability, ample liquidity and a seasoned management team, shares are trading at a forward (FY27) EV/EBITDA multiple of ~4.0x, nearly an all-time low multiple, and a ~43% discount to the stock’s longer-term median of 6.9x. The stock also trades in-line with many less diversified peers.
How Management Allocates Capital
Management’s top priority has been M&A, as the company deployed on average >$300MM per year on acquisitions from 2012 (when the current CFO joined) through the end of 2021. However, management is a stickler for acquiring companies at a reasonable price, looking for IRRs in excess of 20%, and maintaining financial flexibility, with a self-imposed gross leverage cap of 3x (vs. 1.7x as of YE25) in order to make a deal. After M&A, management is focused on buying back its own stock, which the CEO noted is probably their best use of capital at current prices, as it repurchased $174MM worth of stock (~10.9% of market cap) in 2025. Management is also actively addressing the perceived value dislocation through a strategic review to unlock value for shareholders, which culminated in the sale of its Connectivity business for $1.2B, a value greater than the pre-announcement market cap of the entire company, underscoring both the quality of ZD’s assets and the disconnect between public and private market valuations.
We originally posted our investment case for ZD on January 14, 2025.