Q4 2024 Ziff Davis Inc Earnings Call
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
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If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
This call will be Vivek Shah CEO of Ziff Davis.
Speaker Change: Bret Richter, Chief Financial Officer of Ziff Davis.
I will now turn the call over to Bret Richter, Chief Financial Officer of Ziff Davis. Thank you you may begin.
Speaker Change: Good morning, everyone and welcome to the Ziff Davis Investor Conference call for Q4 and fiscal year 2024.
As the operator mentioned I'm, Bret Richter, Chief Financial Officer of Ziff Davis, and I am joined by our Chief Executive Officer Vivek Shah.
Speaker Change: A presentation is available for today's call a copy of this presentation is available on our website. When you launch the webcast. There was a button on the viewer on the right hand side, which will allow you to expand the slides. If you have not received a copy of the press release, you may access it through our corporate website at Www Dot Ziff Davis dot.
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[music]. Thank you for holding we sincerely appreciate your patients stay on the line and we'll be back in a moment.
Speaker Change: Com in addition, you'll be able to access the webcast from this site.
Speaker Change: After completing the formal presentation, we will be conducting a Q&A. The operator will instruct you at that time regarding the procedures for asking questions. In addition, you can email questions to Investor <unk> Ziff Davis Dot com.
Speaker Change: Before we begin our prepared remarks allow me to read the safe Harbor language.
Speaker Change: As you know this call and the webcast will include forward looking statements such statements may involve risks and uncertainties that could cause actual results to differ materially from the anticipated results.
Speaker Change: Some of those risks and uncertainties include but are not limited to.
Speaker Change: The risk factors that we have disclosed in our SEC filings, including our 10-K filings recent 10-Q filings various proxy statements and 8-K filings as well as additional risk factors that we've included as part of the slideshow for the webcast.
Speaker Change: We refer you to discussions in those documents regarding safe Harbor language as well as forward looking statements.
Speaker Change: In addition, following our business outlook slides, our supplemental materials, including reconciliation statements for non-GAAP measures to the nearest GAAP equivalents now.
Vivek: Now, let me turn the call over to Vivek for his remarks. Thank.
Vivek: Thank you Brett and good morning, everyone. While we came up a bit short in Q4 against our admittedly Sanguine estimates, we nonetheless grew revenues by five 9% and our adjusted diluted EPS by 10, 7% in the quarter.
Vivek: Against those measures it was our best revenue growth quarter of the year and our highest level of free cash flow generation.
We look forward to talking with you soon.
Vivek: The 2021 spinoff of consensus.
All the lines.
Vivek: We just came up a touch short in a couple of parts of the business, adding up to roughly $10 million of revenues falling out of a quarter with nearly $413 million in total revenues.
Paul: Good day, ladies and gentlemen, and welcome to the Ziff Davis fourth quarter and year end 2024 earnings Conference call. My name is Paul and I will be the operator assisting you today at this time all participants are in a listen only mode.
Vivek: It's very unusual for us to Miss our own estimates even slightly.
A question and answer session will follow the formal presentation.
Vivek: We very much view it as an anomaly we.
Vivek: We were expecting some upside in our humble games portfolio as well as some bookings in our connectivity business, but simply did not materialize in Q4.
Paul: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Paul: On this call will be Vivek Shah CEO of Ziff Davis, and Bret Richter, Chief Financial Officer of Ziff Davis.
Vivek: But none of it diminishes our outlook for 2025.
Vivek: We plan to build on our 2024 full year results, which included our highest revenue since 2021.
Speaker Change: I will turn the call over to Bret Richter, Chief Financial Officer of Ziff Davis. Thank you you may begin. Thank you good morning, everyone and welcome to the Ziff Davis Investor Conference call for Q4 and fiscal year 2024.
Vivek: Importantly, 2024 represented a return to bottom line growth and outstanding free cash flow, which have long been the priorities of the company.
Speaker Change: As the operator mentioned I'm, Bret Richter, Chief Financial Officer of Ziff Davis, and I'm joined by our Chief Executive Officer Vivek Shah.
Vivek: Our outlook for 2025 reflects an acceleration of our revenue growth from 2020 fours two 8%.
Speaker Change: A presentation is available for today's call a copy of this presentation is available on our website. When you launch the webcast. There was a button on the viewer on the right hand side, which will allow you to expand the slides. If you have not received a copy of the press release, you may access it through our corporate website at Www Dot Ziff Davis.
Vivek: So a midpoint for 2025, 5%.
Vivek: And adjusted EBITDA growth improvement from two 3% to 6%.
Vivek: We believe there is a meaningful disconnect between the current market value of the company.
Vivek: Our strong underlying fundamentals.
Vivek: We're committed to addressing this and we are hopeful that the new segment reporting structure that we are implementing will aid investors and gaining a better understanding.
Speaker Change: <unk> Com in addition, you'll be able to access the webcast from this site after.
Speaker Change: After completing the formal presentation, we'll be conducting a Q&A.
Speaker Change: The operator will instruct you at that time regarding the procedures for asking questions. In addition, you can email questions to Investor Ziff Davis Dot com.
Vivek: And appreciation of the intrinsic value inherent in our business.
Vivek: We are transitioning from two to five reportable segments and.
Speaker Change: Before we begin our prepared remarks allow me to read the safe Harbor language.
Vivek: We believe this reporting structure better aligns with our strategy.
Vivek: And we will provide investors with greater transparency into the performance of our key businesses.
Speaker Change: As you know this call and the webcast will include forward looking statements such statements may involve risks and uncertainties that could cause actual results to differ materially from the anticipated results.
Vivek: Specifically.
Vivek: We are disaggregated the digital media segment.
Vivek: Four reportable segments.
Speaker Change: Some of those risks and uncertainties include but are not limited to.
Vivek: Technology and shopping.
Speaker Change: The risk factors that we've disclosed in our SEC filings, including our 10-K filings recent 10-Q filings various proxy statements and 8-K filings as well as additional risk factors that we've included as part of the slideshow for the webcast.
Vivek: Gaming and entertainment.
Vivek: Health and wellness.
Vivek: In connectivity.
Vivek: The cyber security and Martech segment will remain the same.
Vivek: The Tech and shopping segment includes brands, such as CNET, PC Mag Spice works and Retailmenot.
Speaker Change: We refer you to discussions in those documents regarding safe Harbor language as well as forward looking statements.
Vivek: Our gaming Entertainment segment comprises IGN entertainment and its subsidiary brands, including IGN Gamer network and humble bundle.
Speaker Change: In addition, following our business outlook slides or our supplemental materials, including reconciliation statements for non-GAAP measures to the nearest GAAP equivalent.
Vivek: The health and wellness segment comprises the everyday health group and its subsidiary brands, including everyday health.
Vivek Shah: Now, let me turn the call over to Vivek for his remarks. Thank.
Vivek: Babycenter met page and loser.
Vivek Shah: Thank you Brett and good morning, everyone. While we came up a bit short in Q4 against our admittedly Sanguine estimates, we nonetheless grew revenues by five 9% and our adjusted diluted EPS by 10, 7% in the quarter.
Vivek: The connectivity segment comprises blue collar and its subsidiary brands, including speed test down detector root metrics and at the helm.
Vivek: We have provided five years of historical revenue by segment.
Vivek Shah: Against those measures it was our best revenue growth quarter of the year and our highest level of free cash flow generation.
Vivek: It's worthwhile spending some time to understand some of the trends and dynamics of each of these segments.
Vivek Shah: The 2021 spinoff of consensus.
Vivek: Starting with Teck and shopping.
We just came up a touch short in a couple of parts of the business, adding up to roughly $10 million of revenues falling out of a quarter with nearly $413 million in total revenues.
Vivek: You can see a major spike in revenues in 2021, 55%.
Vivek: Which was a combination of M&A and a meaningful COVID-19 bump.
Vivek Shah: It's very unusual for us to miss their own estimates even slightly.
Vivek: This segment far more than any other benefited from people staying home and shopping online.
Vivek Shah: And very much view it as an anomaly.
Vivek Shah: We were expecting some upside in our humble games portfolio as well as some bookings in our connectivity business, which simply did not materialize in Q4.
Vivek: 2022, and 2023 were very challenging with tough comparisons.
Vivek: And a rapidly deteriorating <unk> lead Gen business.
Vivek Shah: But none of it diminishes our outlook for 2025.
Vivek: Overall, the segment declined 25% over that two year period.
Vivek Shah: We plan to build on our 2024 full year results, which included our highest revenue since 2021.
Vivek: The segment returned to nearly 10% growth in 2024 with AD growth in the Tech category.
Vivek Shah: Importantly, 'twenty 'twenty four represented a return to bottom line growth and outstanding free cash flow, which have long been the priorities of the company.
Vivek: And the addition of CNET offset by some continued shopping and <unk> headwinds.
Vivek: We believe this segment will be our strongest grower in 2025, especially on the bottom line.
Vivek Shah: Our outlook for 2025 reflects an acceleration of our revenue growth from 2020 fours two 8%.
Vivek: With margin expansion and CNET continued growth of our other consumer tech brands.
Vivek Shah: To a midpoint for 2025, 5%.
Vivek Shah: And adjusted EBITDA growth improvement from two 3% to 6%.
Vivek: And the focus on profitability and database.
Vivek: Gaming and entertainment has been a mid single digit grower for a number of years.
Vivek Shah: We believe there is a meaningful disconnect between the current market value of the company and our strong underlying fundamentals.
Vivek: While it is our smallest segment.
Vivek: It has one of the more balanced monetization models and is a great deal of potential to scale, particularly through acquisitions.
Vivek Shah: We're committed to addressing this and we are hopeful that the new segment reporting structure that we are implementing will aid investors and gaining a better understanding and.
Vivek: IGN Entertainment is a leading brand in a growing category.
Vivek: Our next two segments health and wellness and connectivity have long been our fastest growers and while each slowed to nominal growth in 2024, we have many reasons to believe they will return to their more robust growth rates helping.
Vivek Shah: An appreciation of the intrinsic value inherent in our business.
Vivek Shah: We are transitioning from two to five reportable segments.
And we believe this reporting structure better aligns with our strategy.
Vivek Shah: And we will provide investors with greater transparency into the performance of our key businesses.
Vivek: Health and wellness has so many exciting elements, including a trusted care access portfolio, which is the leading hospital media network.
Specifically.
Vivek Shah: Weird disaggregated, the digital media segment into four reportable segments.
Vivek: Fast growing lose it AI driven weight loss and nutrition tracking app.
Vivek: And our pharma AD business that just experienced a promising 2025 upfront buying season and that should benefit from a strong drug pipeline.
Vivek Shah: Technology and shopping.
Vivek Shah: Gaming and entertainment.
Vivek Shah: Health and wellness.
Vivek Shah: In connectivity.
The cyber security and Martech segment will remain the same.
Vivek: Connectivity is our most exciting business and has been fully retooled in 2024 with an ambition to be a larger scaled enterprise.
Vivek Shah: The Tech and shopping segment includes brands, such as CNET, PC Mag Spice works and Retailmenot.
Vivek Shah: The gaming Entertainment segment comprises IGN entertainment and its subsidiary brands, including IGN Gamer network and humble bundle.
Vivek: We undertook a major reorganization, which involved combining our <unk> and <unk> business units to set ourselves up a long term growth.
Vivek: We were willing to sacrifice near term growth for long term gains as we see this business as being the most valuable in our portfolio.
Vivek Shah: The health and wellness segment comprises the everyday health group and its subsidiary brands, including everyday health.
Vivek Shah: Maybe center Med page and lucid.
Vivek: We're also deeper authorizing the AD business within connectivity as well as some other non core revenue streams to focus entirely on subscriptions and data.
Vivek Shah: The connectivity segment comprises fuklah and its subsidiary brands, including speed test down detector root metrics and alcohol.
Vivek: Well theres been no reporting changes to the cyber security and Martech segment. It is worth pointing out that while revenues declined almost 3% in 2024. This was an improvement over the almost 7% decline in 2023, and we maintain a 35% EBITDA margin through disciplined expense management.
Vivek Shah: We have provided five years of historical revenue by segment.
Vivek Shah: It's worthwhile spending some time to understand some of the trends and dynamics of each of these segments.
Vivek Shah: Starting with Teck and shopping.
Vivek Shah: You can see a major spike in revenues in 2021, 55%.
Vivek: We believe this segment will return to growth in the second half of 2025.
Vivek Shah: Which was a combination of M&A any meaningful COVID-19 bump.
Vivek: It was the only segment with declining revenue in 2024, and if we achieve our expectations in 2025, and we will have all five of our segments growing for the first time in a few years.
Vivek Shah: This segment far more than any other benefited from people staying home and shopping online.
Vivek Shah: 2022, and 2023 were very challenging with tough comparisons.
Vivek: Turning to our AI initiatives.
Vivek Shah: And a rapidly deteriorating b to B lead Gen business.
Vivek: Some of our innovations are receiving market recognition.
Vivek: AI powered features and lose it, particularly the voice and photo logging capabilities were recently featured on C. N N.
Vivek Shah: Overall, the segment declined 25% over that two year period.
Vivek Shah: The segment returned to nearly 10% growth in 2024 with AD growth in the Tech category.
Vivek: The article specifically highlighted how our AI technology is transforming nutrition tracking making it as simple as taking a photo of your meal.
Vivek Shah: And the addition of CNET offset by some continued shopping and b to be headwinds.
Vivek: In addition, the.
Vivek: AI job fit analyzer deployed by healthy careers.
Vivek Shah: We believe this segment will be our strongest grower in 2025, especially on the bottom line.
Vivek: Recently showcased as an AWS case study.
Vivek: Healthy careers as reported an 18% increase in engagement with their generative AI powered job search functionality since Q3, 2024, and they've seen a 30% uplift in job applications among users who engage with the AI tools.
Vivek Shah: With margin expansion and seen that continued growth of our other consumer tech brands.
Vivek Shah: And the focus on profitability and B to B.
Vivek Shah: Gaming and entertainment has been a mid single digit grower for a number of years.
Vivek: While there has been industry discussion about <unk> potential impact on search traffic I want to emphasize a few key points.
Vivek Shah: While it's our smallest segment.
Vivek Shah: It has one of the more balanced monetization models and there's a great deal of potential to scale, particularly through acquisitions.
First our business model is diversified well beyond traditional traffic monetization with traffic dependent AD revenues, representing roughly 35% of our overall revenues.
Vivek Shah: IGN Entertainment is a leading brand in a growing category.
Vivek Shah: Our next two segments health and wellness and connectivity have long been our fastest growers and while each slowed to nominal growth in 2024, we have many reasons to believe they will return to their more robust growth rates how.
Vivek: Second within our traffic.
Vivek: Search represents roughly 40% of our visits.
Vivek: Third with respect to our search referrals Ai's presence remains limited.
Vivek Shah: Health and wellness has so many exciting elements, including a trusted care access portfolio, which is the leading hospital media network.
Vivek: AI overviews results are present, and just 12% of our top queries.
Vivek Shah: Fast growing lose it AI driven weight loss and nutrition tracking app.
Vivek: Lastly, our analysis of year over year click through rates, specifically comparing queries with similar positions.
And our pharma AD business that just experienced a promising 2025 upfront buying season and that should benefit from a strong drug pipeline.
Vivek: That now include AI overviews.
Vivek: There is no material aggregate impact on performance.
Vivek Shah: Productivity is our most exciting business and has been fully retooled in 'twenty 'twenty four with an ambition to be a larger scaled enterprise.
Vivek: Given all of the attention and dialogue relating to <unk> I think it's important to reiterate that we view our programs and practices as being entirely value created.
Vivek Shah: We undertook a major reorganization, which involves combining our <unk> and alcohol business units to set ourselves up a long term growth.
Vivek: Because so much of the dialog seems to suggest that AI practices are about exclusion and unfair preferences. It's important at this moment that we'd be very clear about what <unk> means and Ziff Davis.
Vivek Shah: We were willing to sacrifice near term growth for long term gains as we see this business as being the most valuable in our portfolio.
Vivek: At our company.
Vivek: It's always been about fairness equal opportunity and belonging.
Vivek Shah: We're also deeper ties in the AD business within connectivity as well as some other noncore revenue streams to focus entirely on subscriptions and data.
Speaker Change: <unk> is about finding the best talent, regardless of background or circumstances.
Vivek: And ensuring that all can thrive here.
Vivek Shah: Well theres been no reporting changes to the cyber security and Martech segment. It is worth pointing out that while revenues declined almost 3% in 2024. This was an improvement over the almost 7% decline in 2023, and we maintain a 35% EBITDA margin to disciplined expense management.
Vivek: Our work is knowledge work and <unk> is about building our intellectual capital.
Vivek: We're also in the audience business and therefore, it is imperative that we maximize our appeal and reach across a diverse landscape.
Vivek: Simply put <unk> Ziff Davis helps us to drive the best possible business outcomes.
Vivek Shah: We believe this segment will return to growth in the second half of 2025.
Bret Richter: With that let me hand, the call back to Bret.
Vivek Shah: It was the only segment with declining revenue in 'twenty 'twenty, four and if we achieve our expectations in 2025, and we will have all five of our segments growing for the first time in a few years.
Vivek: Vivek, let's discuss our financial results.
Vivek: Our earnings release reflects both our GAAP and adjusted financial results for Q4 and fiscal year 2024.
Vivek Shah: Turning to our AI initiatives.
Vivek: We will focus our discussion today and my commentary will primarily relate to our Q4 2024 adjusted financial results and their prior period comparisons.
Vivek Shah: Some of our innovations are receiving market recognition.
Vivek Shah: Our AI powered features and lose it, particularly the voice and photo logging capabilities were recently featured on C. N N.
Vivek: Let's turn to slide seven for a summary of our Q4 2024 financial results.
Vivek Shah: The article specifically highlighted how our AI technology is transforming nutrition tracking making it as simple as taking a photo of your meal.
Speaker Change: As vivek addressed our new reporting structure and the content on slides four five and six in his remarks.
Vivek Shah: In addition, the AI job set analyzer deployed by health E. Careers was recently showcased at an AWS case study.
Speaker Change: Fourth quarter 2024 revenue was $412 8 million as compared with revenue of $389 9 million for the prior year period, reflecting growth of five 9%.
Vivek Shah: Healthy careers as reported an 18% increase in engagement with their generative AI powered job search functionality.
Speaker Change: Fourth quarter 2024, adjusted EBITDA was $171 8 million as compared with $167 6 million for the prior year period, reflecting two 5% growth.
Vivek Shah: Since Q3, 2024, and they've seen a 30% uplift in job applications among users who engage with the AI tools.
Vivek Shah: While there's been industry discussion about hey is the potential impact on search traffic I want to emphasize a few key points.
Speaker Change: Our adjusted EBITDA margin for the quarter was 41, 6%.
Speaker Change: We reported fourth quarter adjusted diluted EPS of $2.58. This figure reflects a 10, 7% increase as compared with our Q4 2023 adjusted results.
Vivek Shah: First our business model is diversified well beyond traditional traffic monetization with traffic dependent AD revenues, representing roughly 35% of our overall revenues.
Speaker Change: Turning to slide eight our fiscal year 2024, total revenue increased two 8% to $1 billion and 400.
Vivek Shah: Second within our traffic search represents roughly 40% of our visits.
Speaker Change: One $7 million as compared with fiscal year 2023.
Vivek Shah: Third with respect to our search referrals, a ice presence remains limited.
Speaker Change: Fiscal year 2024, adjusted EBITDA grew two 3% to $493 $5 million as.
Vivek Shah: Hey, I overviews results are present, and just 12% of our top queries.
Vivek Shah: Lastly, our analysis of year over year click through rates, specifically comparing queries with similar positions that now include AI overviews.
Speaker Change: Third with fiscal year 2023, adjusted EBITDA, primarily reflecting the growth in revenue or.
Speaker Change: Our adjusted EBITDA margin for fiscal year, 2024 was 35, 2% and relatively constant as compared with fiscal year 2023.
Vivek Shah: There is no material aggregate impact on performance.
Speaker Change: Given all of the attention and dialogue relating to <unk> I think it's important to reiterate that we view our programs and practices as being entirely value created.
Speaker Change: Adjusted diluted EPS grew six 9% to $6 62.
Speaker Change: As compared with fiscal year 2023, adjusted diluted EPS.
But because so much of the dialog seems to suggest the D. I practices are about exclusion and unfair preferences. It's important at this moment that we'd be very clear about what <unk> means Ziff Davis.
Speaker Change: Importantly, revenues adjusted EBITDA and adjusted diluted EPS, all reflect year over year growth for both the fourth quarter and fiscal year 2024, each as compared with the prior year comparable periods.
At our company dei has always been about fairness equal opportunity and belonging.
Speaker Change: However, Q4, 2024 revenues fell short of our expectations and the flow through of this shortfall negatively impacted fourth quarter, adjusted EBITDA and adjusted diluted EPS.
Speaker Change: The eye is about finding the best talent, regardless of background or circumstances, and ensuring that all can thrive here.
Speaker Change: As Vivek noted the two most significant contributors to the shortfall, where our humble games publishing business in our connectivity business.
Speaker Change: Our work is knowledge work.
Speaker Change: <unk> is about building our intellectual capital.
Speaker Change: We're also in the audience business and therefore, it's imperative that we maximize our appeal and reach across a diverse landscape.
Speaker Change: <unk> games publishing fell short of our Q4 expectations driven by a combination of new releases moving into 2025 as well as underperformance of a couple of titles humble games publishing generally delivers less predictable results in certain of our other businesses as noted on prior calls we are focused on delivering our existing slate of games and <unk>.
Speaker Change: Simply put <unk> Ziff Davis helps us to drive the best possible business outcomes.
Bret Richter: With that let me hand, the call back to Bret.
Bret Richter: Thank you Vivek, let's discuss our financial results.
Speaker Change: <unk> for release in 2025 and 2026.
Bret Richter: Our earnings release reflects both our GAAP and adjusted financial results for Q4 and fiscal year 2024.
Speaker Change: Connectivity did not see the level of larger deal activity that was expected in Q4, including the absence of certain historical data sales that would've resulted in Q4 revenue recognition. However, we do not see either of these matters is impacting connectivity future prospects and we look forward to a strong 2025.
Bret Richter: We will focus our discussion today and my commentary will primarily relate to our Q4 2024 adjusted financial results and their prior period comparisons.
Bret Richter: Let's turn to slide seven for the summary of our Q4 2024 financial results.
Speaker Change: Q4, 2024 revenues also reflect certain indirect tax accruals, which were netted against reported revenue. These amounts include the results of an indirect tax audit, which resulted in an unexpected contra revenue item that also impacted adjusted EBITDA.
Vivek Shah: As vivek addressed our new reporting structure and the content of slides four five and six in his remarks.
Vivek Shah: Fourth quarter 2024 revenue was $412.8 million as compared with revenues of $389 9 million for the prior year period, reflecting growth of five 9%.
Speaker Change: While none of these items were particularly large as compared to the overall scale of our activities cumulatively they negatively impacted our Q4 revenue performance.
Vivek Shah: Fourth quarter 2024, adjusted EBITDA was $171.8 million as compared with $167.6 million for the prior year period, reflecting 2.5% growth.
Speaker Change: Overall 2024 was an important year for the company as we return to growth fiscal year 2020 for revenue and adjusted EBITDA. Both grew year over year, and we delivered high single digit growth in adjusted diluted EPS, which reflects not only our operating performance with the impact of our balance sheet management and capital allocation decisions as well.
Vivek Shah: Our adjusted EBITDA margin for the quarter was 41.6%.
Vivek Shah: We reported fourth quarter adjusted diluted EPS of $2.58. This figure reflects a 10.7% increase as compared with our Q4 2023 adjusted results.
Speaker Change: <unk>.
Speaker Change: Cover certain of those capital allocation decisions and.
Speaker Change: In more detail in a moment.
Vivek Shah: Turning to slide eight our fiscal year 2024, total revenue increased 2.8% to 1 billion 400.
Speaker Change: Slides nine and 10 reflect performance summaries for our two primary sources of revenue advertising in performance marketing and subscription and licensing slide nine reflects our Q4 and fiscal year 2020 for advertising in performance marketing revenue.
Vivek Shah: $1.7 million as compared with fiscal year 2023.
Vivek Shah: Fiscal year 2024, adjusted EBITDA grew 2.3% to $493.5 million as compared with fiscal year 2023, adjusted EBITDA, primarily reflecting the growth in revenue.
Speaker Change: Q4, 2020 for advertising in performance marketing revenue grew 10, 6% as compared with the prior year period and fiscal year 2020 for advertising in performance marketing revenue grew by four 1% as compared with 2023.
Vivek Shah: Our adjusted EBITDA margin for fiscal year, 2024 was 35, 2% and relatively constant as compared with fiscal year 2023.
Speaker Change: Excluding our <unk> business advertising in performance marketing revenues would have grown by 12% in Q4 and five 6% for all of 2024.
Vivek Shah: Adjusted diluted EPS grew six 9% to $6.62 as compared with fiscal year 2023, adjusted diluted EPS.
Speaker Change: The table at the bottom of slide nine depicts certain key operating metrics for the fourth quarter. Our net advertising revenue retention an annual 12 month measure was approximately 92% for Q4 2020 for a significant improvement as compared with Q4 2023.
Vivek Shah: Importantly, revenues adjusted EBITDA and adjusted diluted EPS, all reflect year over year growth for both the fourth quarter and fiscal year 2024, each as compared with the prior year comparable periods.
Speaker Change: And the fourth quarters, if Davis had 1899 advertisers with an average quarterly revenue per advertiser with more than $135000 significantly higher than the comparable Q4 2023 metric.
Vivek Shah: However, Q4, 2024 revenues fell short of our expectations and the flow through of this shortfall negatively impacted fourth quarter, adjusted EBITDA and adjusted diluted EPS.
Vivek Shah: As Vivek noted the two most significant contributors to the shortfall, where our humble games publishing business in our connectivity business hub.
Speaker Change: Slide 10 depicts our subscription and licensing revenue performance.
Speaker Change: Q4, 2020 for subscription and licensing revenue grew approximately 1% as compared with the prior year period and these revenues grew nearly 2% during the last 12 months.
Vivek Shah: Mobile games publishing fell short of our Q4 expectations driven by a combination of new releases moving into 2025 as well as underperformance of a couple of titles humble games publishing generally delivers less predictable results in certain of our other businesses as noted on prior calls we are focused on delivering our existing slate of games and <unk>.
Speaker Change: The table on the bottom of slide 10 includes subscription and licensing metrics for the fourth quarter total subscription and licensing customers increased to 365 million customers, which includes growth at humble bundle and lose at.
<unk> for release in 2025 and 2026.
Speaker Change: Our average quarterly revenue per customer was $40.44 and subscription and licensing churn was two 3%.
Vivek Shah: Connectivity did not see the level of larger deal activity that was expected in Q4, including the absence of certain historical data sales that would've resulted in Q4 revenue recognition. However, we do not see either of these matters is impacting connectivity future prospects and we look forward to a strong 2025.
Speaker Change: With regard to the balance of our revenue the company's Q4 2024 other revenues declined year over year to $7 5 million from $10 5 million in Q4 2023.
Speaker Change: With regard to our balance sheet. Please refer to slide 11.
Vivek Shah: Q4, 2024 revenues also reflect certain indirect tax accruals, which when netted against reported revenue. These amounts include the results of an indirect tax audit, which resulted in an unexpected contra revenue item that also impacted adjusted EBITDA.
Speaker Change: As of the end of Q4, 2024, we had $506 million of cash and cash equivalents and approximately $158 million of long term investments. We also continue to have significant leverage capacity, both on a gross and net leverage basis.
Vivek Shah: While none of these items were particularly large as compared to the overall scale of our activities cumulatively they negatively impacted our Q4 revenue performance.
Speaker Change: As of the end of 2024 gross leverage of one eight times trailing 12 months adjusted EBITDA and our net leverage was <unk> seven times and only four times. If you include the value of our long term investments.
Vivek Shah: Overall 2024 was an important year for the company as we returned to growth fiscal year 2020 for revenue and adjusted EBITDA. Both grew year over year, and we delivered high single digit growth in adjusted diluted EPS, which reflects not only our operating performance, but the impact of our balance sheet management and capital allocation decisions as well.
Speaker Change: 2024 was a very active year for our capital allocation activities.
Speaker Change: First and foremost 2024 reflected a significant increase in M&A activity as compared with 2022 and 2023.
Vivek Shah: L.
Vivek Shah: I will cover certain of those capital allocation decisions.
Speaker Change: During 2024, we deployed more than $225 million for current and prior year acquisitions, our cyber security and Martech business closed one small acquisition in the fourth quarter, marking its first transaction since 2021 as.
Vivek Shah: In more detail in a moment.
Vivek Shah: Slides nine and 10 reflect performance summaries for our two primary sources of revenue advertising in performance marketing and subscription and licensing slide nine reflects our Q4 and fiscal year 2020 for advertising in performance marketing revenue.
Speaker Change: As a reminder, during Q3 2024, we also completed an exchange offer for $409 million of our 175% convertible notes due 2026 as a result of this transaction we reduced the gross amount of our outstanding debt by $138 million extended the maturity.
Vivek Shah: Q4, 2020 for advertising in performance marketing revenue grew 10, 6% as compared with the prior year period and fiscal year 2020 for advertising in performance marketing revenue grew by 4.1% as compared with 2023.
Speaker Change: Of $263 million of our debt principal outstanding and reduce the total number of shares underlying our outstanding convertible debt by more than $1 1 million shares.
Vivek Shah: Excluding our b to B Tech business advertising, a performance marketing revenues would have grown by 12% in Q4 and five 6% for all of 2024.
Speaker Change: During 2024, we also deployed more than $185 million in capital to repurchase our common shares.
Vivek Shah: The table at the bottom of slide nine to pick certain key operating metrics for the fourth quarter. Our net advertising revenue retention an annual 12 month measure was approximately 92% for Q4 2020 for a significant improvement as compared with Q4 2023.
Speaker Change: Included in this amount is the repurchase of $3 5 million shares in the open market, where approximately seven 6% of our shares outstanding as of the beginning of 2024.
Vivek Shah: In the fourth quarters, if Davis had 1899 advertisers with an average quarterly revenue per advertiser with more than $135000 significantly higher than the comparable Q4 2023 metric.
Speaker Change: Although we did not repurchase any shares in the open market during the fourth quarter, there were more than $6 2 million remaining shares authorized under our stock repurchase program and we will continue to be opportunistic with regard to future stock repurchases.
Vivek Shah: Slide 10 depicts our subscription and licensing revenue performance Q.
Speaker Change: Our balance sheet is one of our most valuable assets, particularly in the context of our M&A strategy and our overall capital allocation strategy.
Vivek Shah: Q4, 2020 for subscription and licensing revenue grew approximately 1% as compared with the prior year period and these revenues grew nearly 2% during the last 12 months.
Speaker Change: We continue to pursue transactions of various sizes across all of our businesses and we look forward to a significant level of M&A activity in 2025 and beyond turning to slides 13, and 14, which provides certain details relating to our 2025 guidance range.
The table on the bottom of slide 10 includes subscription and licensing metrics for the fourth quarter total subscription and licensing customers increased to 3.65 million customers, which includes growth at humble bundle and lose at.
Speaker Change: Our guidance range reflects growth in revenue adjusted EBITDA and adjusted diluted EPS at both the high end and the low end of each metrics guidance range.
Vivek Shah: Our average quarterly revenue per customer was $40.44 and subscription and licensing churn was 2.83%.
Speaker Change: Our guidance reflects an improving outlook for our reportable segments. In particular, we expect improved performance from tech and shopping and health and wellness in part due to lapping certain specific 2024 performance challenges. We expect continued growth from our gaming and entertainment business and a significant increase in connectivity growth.
Vivek Shah: With regard to the balance of our revenue the company's Q4 2024, other revenues declined year over year to $7.5 million from $10.5 million in Q4 2023.
Vivek Shah: With regard to our balance sheet. Please refer to slide 11.
Vivek Shah: As of the end of Q4, 2024, we had $506 million of cash and cash equivalents and approximately $158 million of long term investments. We also continue to have significant leverage capacity, both on a gross and net leverage basis.
Speaker Change: Finally, we believe cyber security and Martech will continue to improve.
Speaker Change: The high end of our guidance for 2025 revenue adjusted EBITDA and adjusted diluted EPS reflects growth rates of approximately seven 2% nine 8% and 10% as compared with the unaudited results we present today.
Vivek Shah: As of the end of 2024 gross leverage of 1.8 times trailing 12 months adjusted EBITDA and our net leverage was 0.7 times and only 0.4 times. If you include the value of our long term investments.
Speaker Change: Oh and reflects growth of approximately two 9% to 3% and 3% for revenue adjusted EBITDA and adjusted diluted EPS, respectively.
Vivek Shah: 2024 was a very active year for our capital allocation activities.
Speaker Change: Our EPS guidance reflects the adjusted EBITDA range higher depreciation from our recent and planned capital investments higher net interest expense slightly higher taxes, and a lower average share count each as compared with 2024.
Vivek Shah: First and foremost 2024 reflected a significant increase in M&A activity as compared with 2022 and 2023.
Vivek Shah: During 2024, we deployed more than $225 million for current and prior year acquisitions, our cyber security and Martech business closed one small acquisition in the fourth quarter, marking its first transactions since 2021 as.
Speaker Change: The midpoint of our guidance reflects mid single digit growth in advertising and performance marketing revenue subscription and licensing revenue growth in the low to mid single digits and low teens or the revenue growth each as compared with the prior year period. The midpoint also reflects modest revenue growth in the first quarter and a higher rate of growth in the second half of the year.
As a reminder, during Q3 2024, we also completed an exchange offer for $409 million of Rogue, 1.75% convertible notes due 2026 as a result of this transaction move reduce the gross amount of our outstanding debt by $138 million extended the maturity.
Speaker Change: Year as compared with the first half.
Speaker Change: 2025 expected revenue growth as a function of both organic growth and inorganic growth from recent acquisitions.
Speaker Change: We expect our first quarter performance to be relatively muted as compared with our expectations for the balance of the year. Our Q1 2024 results reflected a particularly strong quarter for cyber security and Martech and we expect Q1 2025 to more closely reflect the year end 2024 run rate of the business we have.
Vivek Shah: Of $263 million of our debt principal outstanding and reduce the total number of shares underlying our outstanding convertible debt by more than 1.1 million shares.
Vivek Shah: During 2024, we also deployed more than $185 million in capital to repurchase our common shares.
Vivek Shah: Included in this amount is a repurchase of 3.5 million shares in the open market, where approximately seven 6% of our shares outstanding as of the beginning of 2024.
Speaker Change: Also have initiated and are expected to continue.
Certain spending initiatives, which are expected to suppress Q1 2025 margins as compared with Q1 2024.
Vivek Shah: Although we did not repurchase any shares in the open market during the fourth quarter, there were more than $6 2 million remaining shares authorized under our stock repurchase program and we will continue to be opportunistic with regard to future stock repurchases.
Speaker Change: However, we expect second quarter growth and margins to begin to improve as we continue to pursue our full year growth plan.
Given the seasonality of our advertising in performance marketing revenue, we anticipate that more than 20% of our revenues will be realized in the first quarter with approximately 30% expected in the fourth quarter.
Vivek Shah: Our balance sheet is one of our most valuable assets, particularly in the context of our M&A strategy and our overall capital allocation strategy.
Speaker Change: At the midpoint of our range the company expects to have an adjusted EBITDA margin of approximately 35, 5% for the year a.
Vivek Shah: We continue to pursue transactions of various sizes across all of our businesses and we look forward to a significant level of M&A activity in 2025 and beyond turning to slides 13, and 14, which provides certain details relating to our 2025 guidance range.
Speaker Change: Slight improvement as compared with 2024, we maintain the range of our projected tax rate at an annual rate of between 23, 25% and $25. Two 5% note. These rates are expected to fluctuate quarterly.
Vivek Shah: Our guidance range reflects growth in revenue adjusted EBITDA and adjusted diluted EPS at both the high end and the low end of each metrics guidance range.
Speaker Change: Our guidance does not reflect incremental M&A or additional share repurchases in 2025.
Vivek Shah: Our guidance reflects an improving outlook for our reportable segments. In particular, we expect improved performance from tech and shopping and health and wellness in part due to lapping certain specific 2024 performance challenges. We expect continued growth from our gaming and entertainment business and a significant increase in connectivity growth.
We plan to continue to maintain an active capital allocation program.
Speaker Change: We believe this guidance reflects the proper balance of pursuing investments in our business to support growth opportunities in 2025, and beyond and our focus on delivering profitable growth robust adjusted EBITDA margins and free cash flow generation.
Speaker Change: We plan to continue to rely on the free cash flow, we generate to support our capital allocation strategy and.
Vivek Shah: Finally, we believe cyber security and Martech will continue to improve.
Vivek Shah: The high end of our guidance for 2025 revenue adjusted EBITDA and adjusted diluted EPS reflects growth rates of approximately 7.2%, 9.8% and 10% as compared with the unaudited results we present today.
Speaker Change: And as noted earlier, we believe we have substantial leverage capacity to support larger capital allocation initiatives, if the right circumstances arise.
Speaker Change: Following our business outlook slides of our supplemental materials, including reconciliation statements for the various non-GAAP measures to the nearest GAAP equivalent.
Vivek Shah: Lugo and reflects growth of approximately 2.9% two points, 3% and 0.3% for revenue adjusted EBITDA and adjusted diluted EPS, respectively.
Speaker Change: Please see slide 26, which includes a reconciliation of free cash flow to net cash provided by operating activities.
Speaker Change: Our 2020 for free cash flow was more than $283 million or.
Vivek Shah: Our EPS guidance reflects the adjusted EBITDA range higher depreciation from our recent and planned capital investments higher net interest expense slightly higher taxes, and a lower average share count each as compared with 2024.
Speaker Change: A significant increase as compared with 2023.
Speaker Change: As shown on this slide Q4, 2020 for free cash flow of $131 million nearly doubled as compared with Q4 2023 fiscal year 2020 for free cash flow reflects 57, 5% of our 2020 for fiscal year adjusted EBITDA of $493 5 million.
Vivek Shah: The midpoint of our guidance reflects mid single digit growth in advertising and performance marketing revenue subscription and licensing revenue growth in the low to mid single digits and low teens or the revenue growth each as compared with the prior year period. The midpoint also reflects modest revenue growth in the first quarter and a higher rate of growth in the second half of.
Speaker Change: These figures include a significant contribution from our TTS business, which has a seasonally high level of activity and free cash flow during the fourth quarter.
Vivek Shah: The year as compared with the first half.
Speaker Change: Consistent with 2020 for Tds is expected to have significant working capital usage in the first quarter.
2025 expected revenue growth as a function of both organic growth and inorganic growth from recent acquisitions, we expect our first quarter performance to be relatively muted as compared with our expectations for the balance of the year. Our Q1 2024 results reflected a particularly strong quarter for cyber security and Martech.
Speaker Change: As Vic noted 2024 marked the return to growth for our company, we look forward to continuing that growth in 2025.
Speaker Change: This call also marks a new presentation of the financial results of our company.
Speaker Change: We believe this reporting structure will ultimately allow investors to gain deeper insight into each of our reportable segments and we trust that the information that we presented today, we will give our stakeholders a deeper appreciation of the diversity of our revenue composition the scale of our businesses and the strength of their margins.
Vivek Shah: And we expect Q1 2025 to more closely reflect the year end 2024 run rate of the business. We also have initiated and are expected to continue.
Vivek Shah: Certain spending initiatives, which are expected to suppress Q1, 2000 and twenty-five margins as compared with Q1 2024.
Speaker Change: With this information we hope you will develop a clearer understanding of the intrinsic value of these businesses and why we are excited for the upcoming year and beyond.
Vivek Shah: However, we expect second quarter growth and margins to begin to improve as we continue to pursue our full year growth plan.
Speaker Change: With that I would now ask the operator to rejoin us and instruct you on how to queue for questions.
Vivek Shah: Given the seasonality of our advertising of performance marketing revenue, we anticipate that more than 20% of our revenues will be realized in the first quarter with approximately 30% expected in the fourth quarter.
Speaker Change: Thank you we will now be conducting a question and answer session in the interest of time, we ask that you. Please limit yourself to one question.
Vivek Shah: At the midpoint of our range the company expects to have an adjusted EBITDA margin of approximately 35, 5% for the year, a slight improvement as compared with 2024, we maintain the range of our projected tax rate at an annual rate of between 23.25% and $25. Two 5% note. These rates are.
Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove yourself from the queue for.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment. Please while we begin.
Vivek Shah: Expected to fluctuate quarterly.
Vivek Shah: Our guidance does not reflect incremental M&A or additional share repurchases. In 2025. However, we plan to continue to maintain an active capital allocation program.
Speaker Change: And the first question today is coming from Ross Sandler from Barclays. Ross Your line is live.
Speaker Change: Great. Thanks, guys.
Vivek Shah: We believe this guidance reflects the proper balance of pursuing investments in our business to support growth opportunities in 2025, and beyond and our focus on delivering profitable growth robust adjusted EBITDA margins and free cash flow generation. We plan to continue to rely on the free cash flow, we generate to support our capital allocation strategy and as.
Speaker Change: Vivek, maybe just to start.
Vivek: <unk> about like the macro environment as we look into 'twenty five.
Vivek: Our view out there that like some of these AI tools from the walled gardens like performance, Max and advantage plus might be.
Vivek: Kind of increasing this shift into walled garden and away from open web.
Vivek Shah: Noted earlier, we believe we have substantial leverage capacity to support larger capital allocation initiatives, if the right circumstances arise.
Speaker Change: Digital advertising so it sounds like you guys at least in pharma.
Vivek Shah: Following our business outlook slides of our supplemental materials, including reconciliation statements for the various non-GAAP measures to the nearest GAAP equivalent.
Speaker Change: We are having a good upfront and without this shift that's being described here.
Speaker Change: Isn't having too much of an impact, but would just love to hear.
Vivek Shah: Please see slide 26, which includes a reconciliation of free cash flow to net cash provided by operating activities.
Speaker Change: By category, how things are looking in 25% at the beginning of the year here.
Vivek Shah: Our 2020 for free cash flow was more than $283 million, a significant increase as compared with 2023.
Speaker Change: With that 4% to 5% growth rate for advertising.
As shown on this slide Q4, 2020 for free cash flow of $131 million nearly doubled as compared with Q4 2023 fiscal year 2020 for free cash flow reflects 57, 5% of our 2020 for fiscal year adjusted EBITDA of $493 5 million.
Speaker Change: What underlying organic growth rate are we assuming in there. Thank you very much.
Speaker Change: Thanks for the question Ross so.
Speaker Change: Let me zoom out just to just a moment in terms of the AD business in 2024.
Speaker Change: <unk>.
Speaker Change: Q4 was a strong quarter, a little over 10% at <unk>, obviously seen that helped with with our AD growth in the quarter, but consumer tech with the rest of consumer Tech was relatively strong and going into next year. Just one thing I will point out is that within the tech add number.
Vivek Shah: These figures include a significant contribution from our TTS business, which has a seasonally high level of activity and free cash flow during the fourth quarter.
Vivek Shah: Consistent with 2024 T. D. S is expected to have significant working capital usage in the first quarter.
As Vic noted 2024 marked a return to growth for our company.
Speaker Change: As our <unk> business and as I've talked about in the past we have a planned reduction in revenue.
Vivek Shah: We look forward to continuing that growth in 2025.
Speaker Change: In that business, which will obviously.
Speaker Change: This call also marks a new presentation of the financial results of our company.
Speaker Change: Detract from growth rate, but will improve profitability. So thats, just something to keep in mind, Thats, probably 150 basis points of that.
Speaker Change: We believe this reporting structure will ultimately allow investors to gain deeper insight into each of our reportable segments and we trust that the information that we presented today will give our stakeholders a deeper appreciation of the diversity of our revenue composition the scale of our businesses and the strength of their margins.
Speaker Change: Headwind against growth rate. So we feel reasonably good about as a category picking up on the momentum from 2020 for gaming and Entertainment again, you can now see this in our new segment disclosures, but.
Speaker Change: With this information we hope you will develop a clearer understanding of the intrinsic value of these businesses and why we are excited for the upcoming year and beyond.
Speaker Change: Really good growth in that segment, particularly on the AD side, we think that's going to continue.
Speaker Change: With that I would now ask the operator to rejoin us and instruct you on how to queue for questions.
Speaker Change: Into next year, so we like that from a category point of view.
Speaker Change: And while this was a relatively flat business for us in in 2024, it's been as you will see a historically a very strong while our I T.
Speaker Change: Thank you we will now be conducting a question and answer session in the interest of time, we ask that you. Please limit yourself to one question.
Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove yourself from the queue for.
Speaker Change: Talked about.
Speaker Change: Some challenges we had with the very large pharma advertiser, we think those challenges are working their way out as I noted in my prepared remarks.
Speaker Change: Yes.
Speaker Change: Have been have been pretty strong and so we feel really really good about that so look I mean, it is a category in cabinet for a you've got to look at this categorically, but overall I would just say that a mid single digit.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment. Please while we begin.
Speaker Change: And the first question today is coming from Ross Sandler from Barclays. Ross Your line is live.
Speaker Change: <unk> growth outlook at midpoint is prudent given the experience we've had the last couple of years.
Ross Sandler: Great. Thanks, guys.
Vivek Shah: Vivek, maybe just to start.
Vivek Shah: <unk> about like the macro environment as we look into 'twenty five there's a view out there that like some of these AI tools from the walled gardens like performance, Max and advantaged plus might be.
Speaker Change: I know you didn't ask about the subscription business, but in overall outlook I do think it's just also worth pointing out.
Speaker Change: We're going to accelerate our growth from around 2% in 2024 to about 4% at the midpoint and key to that is improved growth at connectivity continued growth at health and wellness and gaming and then just some improving second half trends, we're seeing in fiber and mark. Thanks. So look there's a lot here I think it will be.
Vivek Shah: Kind of increasing the shift into walled garden and away from open web.
Speaker Change: Digital advertising so it sounds like you guys at least in pharma.
Are having a good upfront and without this shift that's being described here.
Speaker Change: I think we're appropriately cautious as we think about 2025, just given some of the experiences we've had over the last couple of years last thing I'm, just going to say because you did ask about open web versus sort of the.
Speaker Change: Isn't having too much of an impact, but would just love to hear.
Speaker Change: By category.
Speaker Change: How things are looking in 25 at the beginning of the year here.
Speaker Change: The walled garden, what I will say against that is that I do think in each of our large in each of our main AD categories right. So that.
Speaker Change: With that 4% to 5% growth rate for advertising.
Speaker Change: What underlying organic growth rate are we assuming.
Speaker Change: Shopping gaming and health.
Speaker Change: In there thank you very much.
Speaker Change: Leadership position in each of those and what I will tell you is that marketers want a balance what theyre doing within social networks, what theyre doing with search against what they're doing in index and so we view ourselves as being leaders in these endemic categories, which happened to be pretty robust AD category. So I think we're in a.
Vivek Shah: Thanks for the question Ross so.
Let me zoom out just to just a moment in terms of the AD business in 2024.
Vivek Shah: Q4 was a strong quarter, a little over 10% at <unk>, obviously seen that helped with our AD growth in the quarter, but consumer Tech was the rest of consumer Tech was relatively strong and going into next year. Just one thing I will point out is that within the Tech Act number.
Speaker Change: Position than the rest of may be the open web where I think it's more of a programmatic driven proposition and as you know programmatic is a small piece.
Vivek Shah: As our <unk> business and as I've talked about in the past we have a planned reduction in revenue.
Speaker Change: Of our overall equation.
Speaker Change: Well, it's the only thing I might add and you used the word macro is if you just go beyond advertising and just broaden the lens on economic macro 2022 and into 2023, the global economy, the domestic economy, where headwinds I would say in 2024 was relatively benign and as the very molded.
Vivek Shah: In that business, which will obviously.
Vivek Shah: Detract from growth rate, but will improve profitability. So that's just something to keep in mind, that's probably 150 basis points of that.
Vivek Shah: Headwind against growth rates.
Vivek Shah: We feel reasonably good about as a category picking up on the momentum from 2020 for gaming and Entertainment again, you can now see this in our new segment disclosures, but.
Speaker Change: It's essentially the same but there's a tremendous amount of dialogue, if not activity and elements of the global macro whether it be fuse and the change in the inflationary curve, whether it be tariffs whether it be the.
Vivek Shah: Really good growth in that segment, particularly on the AD side, we think that's going to continue.
Speaker Change: A continuation if not feared escalation of.
Vivek Shah: Into next year, so we like that from from a category point of view health.
Speaker Change: National activity.
Speaker Change: We've essentially assumed constant for our plan. If there are massive shifts we obviously have the adjustment.
Vivek Shah: Health and wellness was a relatively flat business for us in in 2024, it's been as you will see a historically a very strong while our I've talked about.
Speaker Change: Thank you.
Speaker Change: Thank you.
Some challenges we had the very large pharma advertiser, we think those challenges are working their way out as I noted in my prepared remarks the upfronts.
Next question will be from Yigal <unk> from Citi.
Speaker Change: <unk> Your line is live.
Speaker Change: Hey, good morning, guys I'll start with.
Vivek Shah: Have been have been pretty strong and so we feel really really good about that so look I mean, it is a category in cabinet or a you've got to look at this category Lee, but overall I would just say that a mid single digit.
Speaker Change: Capital allocation.
Speaker Change:
Speaker Change: I guess broadly about focus on M&A.
Speaker Change: And your leverage.
Speaker Change: As we go through 2025, why not press a little bit more here and I know you've been.
Speaker Change: Cautious and patient around the M&A environment.
Vivek Shah: <unk> growth outlook.
Vivek Shah: Mid point is prudent given the experience we've had the last couple of years.
Speaker Change: When you talk about it picking up in.
Speaker Change: Ed.
Speaker Change: I think you didn't buyback any stock in <unk> does that have anything to do with that building up for M&A. What are your thoughts around that and does.
Vivek Shah: I know you didn't ask about the subscription business, but in overall outlook I do think it's just also worth pointing out.
Speaker Change: As Jen AI play into your user targets for M&A this year as well.
Vivek Shah: And we're going to accelerate our growth from around 2% in 2024 to about 4% at the midpoint and key to that is improved growth at connectivity continued growth at health and wellness and gaming and then just some improving second half trends, we're seeing in fiber and mark. Thanks. So look there's a lot here I think worked well.
Speaker Change: Yes, listen Greg questions ago. So I'd say look remember 24 was healthy from an M&A point of view, we deployed about 20.
Speaker Change: $5 million and Thats after almost no deal activity in 2023, So I do think it's worth noting that things are happening.
Vivek Shah: I think we're appropriately cautious as we think about 2025, just given some of the experiences we've had over the last couple of years last thing I'm, just going to say because you did ask about open web versus sort of the walled gardens, what I will say against that is that I do think in E.
Speaker Change: The pipeline right now is very active and so our hope is that 2025 will be at least consistent in terms of capital deployment for M&A versus 2024, and then we're going to start seeing.
Speaker Change: Some pounding effects of serial acquisition, which had been a hallmark of this company for a long time, but had been absent.
<unk> large in each of our main AD categories right. So Tac.
Speaker Change: For the last several years.
Vivek Shah: Shopping gaming and health.
Speaker Change: I'm going to say is all five of our divisions, which of our five reportable segments are actively pursuing deals that wasn't necessarily the case over the last few years. All five are very focused with respective pipelines that are pretty robust cyber security and mark that did its first deal in Q4.
Vivek Shah: Leadership position in each of those and what I will tell you is that marketers want a balance what theyre doing within social networks, what theyre doing with search against what they're doing in index and so we view ourselves as being leaders in in these endemic categories, which happened to be pretty robust AD category. So I think we're in a dip.
Speaker Change: Since 2021.
Vivek Shah: Current position than the rest of may be the open web where I think it's more of a programmatic driven proposition and as you know programmatic is a small piece.
Speaker Change: So they were kind of on the sidelines and they are firmly back on the field.
Speaker Change: We have the capacity from an operating point of view and obviously from a balance sheet point of view to add a new vertical if thats something that we see as being an attractive opportunity for us.
Vivek Shah: Of our overall equation.
Vivek Shah: Well, it's the only thing I might add and use the word macro is if you just go beyond advertising and just broaden the lens on economic macro 2022 and into 2023, the global economy, the domestic economy, where headwinds I would say in 2024 was relatively benign and as the very molded.
And then you start to speak to it I think with your Gen. Eight Gen. II question valuations in digital media.
Speaker Change: Pretty attractive right now right, obviously, we see it reflected.
Speaker Change: Some of the fears that must be attached oros dot, but we're inclined to lean into those fears we think that our own experience here is that there's some great brands.
Vivek Shah: It's essentially the same but there is a tremendous amount of dialogue, it's not activity in elements of the global macro whether it be views of the change in the inflationary curve, whether it be tariffs whether it be the.
Speaker Change: Attract audiences from which we can extract multiple.
Speaker Change: And that is what we do and so from our point of view.
Speaker Change: If we have if we see great brands that may have some struggle from a from a financial point of view that where youre going to see us strike. So look we have the cash as we pointed out we have the borrowing capacity and.
Vivek Shah: The continuation if not feared escalation of.
Vivek Shah: International activity.
Vivek Shah: We've essentially assumed constant for our plan. If there are massive shifts we obviously have the adjustment.
Vivek Shah: Thank you.
Speaker Change: Well I think it is a balance between we have been patient, but we're also impatient in some ways to really get some of these things across the finish line.
Vivek Shah: Thank you.
Speaker Change: The next question will be from Yigal Iranian from Citi.
Speaker Change: Your line is live.
I'm optimistic about it but Brett any you that yes, the only thing I'd add on M&A is that the one element we always have to be patient on is price. There is no success factor in M&A, that's more important than what youre paying initially and sometimes thats where deals get done or don't get done, but we're very very active in the <unk>.
Yigal Iranian: Hey, good morning, guys I'll start with <unk>.
Speaker Change: Capital allocation.
Speaker Change: I guess broadly about focus on M&A.
Speaker Change: And your leverage in.
Your views as we go through 2025, why not press a little bit more here I know you've been.
Speaker Change: Cautious and patient around the M&A environment.
Speaker Change: <unk> and exploring all opportunities and yes.
Speaker Change: When you talk about it picking up in.
Speaker Change: Hopefully some of those come to fruition on capital.
Speaker Change: Got it.
Speaker Change: Sure.
Speaker Change: Allocation.
Speaker Change: I think you didn't buyback any stock in <unk> does that have anything to do with that building up for M&A. What are your thoughts around that and that is how much.
Speaker Change: It's not a programmatic approach I don't think we've ever been a company that buys a certain amount of stock every quarter.
Speaker Change: In the three years since the spin, which had a three years I've been here 2024 is far and away. Our most active capital allocation period mentioned the $225 million of M&A, we bought back over $180 million worth of stock retiring over seven 5% of the shares.
Speaker Change: As Jen AI play into your user targets for M&A this year as well.
Speaker Change: Yes, listen Greg questions ago. So I'd say look remember 2024 was healthy from an M&A point of view, we deployed about two of the $25 million and Thats. After almost no deal activity in 2023. So I do think it's worth noting that things are happening the pipeline right now is.
Speaker Change: We started the year with we paid down some debt.
Speaker Change: The convertible exchange can be gained and deployed another $135 million of capital, Yes, we do want to maintain our capacity for M&A, but we will deploy it in the stock buyback I just wouldn't expect it every quarter on a programmatic basis I think it's important that in addition to the $3 5 million shares that we bought back in two.
Speaker Change: Very active and so our hope is that 2025 will be at least consistent in terms of capital deployment for M&A versus 2024, and then we're going to start seeing.
Speaker Change: Some pounding effects of serial acquisition, which had been a hallmark of this company for a long time, but had been absent.
Speaker Change: 24, our board increased the authorization in the summer. So we have over 6 million shares currently authorized to execute upon and we'll balance that against all other capital allocation opportunities.
Speaker Change: For the last several years.
Speaker Change: I'm going to say is all five of our divisions, which are five reportable segments are actively pursuing deals that wasn't necessarily the case over the last few years.
Speaker Change: Okay, Thanks, and if I could just as a follow up on updated thoughts around licensing with the LMS.
Speaker Change: All five are very focused with respective pipelines that are pretty robust cyber security and mark that did its first deal in Q4 since 2021.
Speaker Change: Sure.
Speaker Change: Assuming legal action or what the strategy is we saw kind of a tech media company yesterday.
Speaker Change: So they were kind of on the sidelines and they are firmly back on the field.
Speaker Change: The election and call out Google in particular for.
Speaker Change: We ended <unk>.
<unk> from an operating point of view and obviously from a from a balance sheet point of view to add a new vertical if that's something that we.
Speaker Change: Taking a traffic away and you talk to you.
Speaker Change: Vivek.
Speaker Change: Up until today kind of repeatedly talked about you're not seeing that.
Speaker Change: We see as being an attractive opportunity for us.
Speaker Change: Just what are your updated thoughts around partnerships.
Speaker Change: And then you sort of speak to it I think with your Jedi journey I question valuations in digital media.
Speaker Change: Your approach here. Thanks.
Speaker Change: Hey, listen I think that so I can see today at news I think the lower notable.
Speaker Change: Are pretty attractive right now right, obviously, we see it reflected.
Speaker Change: News was a week or two ago a court decision.
Speaker Change: Some of the fears that must be attached or own stock, but we're inclined to lean into those fears we think that our own experience the areas that listen great brands.
Relating to copyright and fair use that I think it was very favorable favorable to copyright owners and look I think that's fundamentally we are open.
Speaker Change: Attract audiences from which we can extract multiple.
Speaker Change: And having discussions around licensing agreements, but they need to be fair value they need to be long term and I think they need to recognize that it is in fact, a license to copyright.
Speaker Change: And that is what we do and so from our point of view.
Speaker Change: If we have if we see great brands that may have some struggle from a from a financial point of view, that's where youre going to see US strike. So look we have the cash as we pointed out we have the borrowing capacity.
Speaker Change: Versus an agreement that.
Speaker Change: That is more focused on.
Speaker Change: Okay.
Speaker Change: Having people not come after them for copyright violation. So we're going to play I think we're going to be patient here I don't think the numbers in any of the numbers you have seen.
Speaker Change: And.
Bret Richter: Look I think it's a balance between we have been patient, but we're also impatient in some ways to really get some of these things across the finish line and I you know I'm optimistic about it but Brett you that yes. The only thing I'd add on M&A is that the one element we always have to be patient on is price. There is no success factor in M&A.
Publicly reported on that material anywhere for us to feel like we need to move quickly and cut a deal that might be short term beneficial, but not long term.
Speaker Change: Appropriate for the company. So look I think we are.
Bret Richter: It's more important than what youre paying initially and sometimes that's where deals get done or don't get done, but we're very very active in.
Speaker Change: Very focused on making sure that if youre training at all on our non debt. If you are trading against our content and we need to get fair compensation for that.
Bret Richter: In the pipeline and exploring all opportunities and yes.
Speaker Change: On your other question, which I separate right, which is what's happening in search.
Bret Richter: Hopefully some of those come to fruition.
Bret Richter: On capital allocation.
Speaker Change: Is it a fair amount within the prepared remarks, but I might reiterate one or two statements that come up with respect to at least our own experience, which is the rate at which AI overviews up here against the query that matter most to US is still relatively small at 12%. So that's that's the first thing.
Bret Richter: It's not a programmatic approach I don't think we've ever being a company that buys a certain amount of stock every quarter, but would be in the three years since the spend which of the three years I've been here 2020 boards far and away. Our most active capital allocation period of Quebec mentioned, the $225 million of M&A.
Speaker Change: But the second thing that I would point out is that in our analysis of queries, where AI overviews of present or and then I'll present today, but we're not present in the past and our search rank remained unchanged. The overall click through rate is also relatively unchanged. So.
Bret Richter: We bought back over $180 million worth of stock retiring over seven 5% of the shares that we started the year with we paid down some debt in the convertible exchange that we did and deployed another $135 million of capital, Yes, we do want to maintain our capacity for M&A, but we will.
Speaker Change: There are those who argue that the presence of our AI overviews actually enhanced click through rates. There are those who argue that the presence of AI. All of these are certain queries.
Bret Richter: We'll deploy it in the stock buyback I just wouldn't expect it every quarter on a programmatic basis I think it's important that in addition to the $3 5 million shares that we bought back in 2024, our board increased the authorization in the summer. So we have over 6 million shares currently authorized to execute upon and well balanced.
Speaker Change: Tracks from click through rates I think it probably does that depends categorically I think there are many things that evolve on the search engine results page AD placements other types of.
Bret Richter: That against all other capital allocation opportunities.
Speaker Change: Changes Google is experimenting constantly so again I don't I don't see a quibble there for us I am more tier quibble around.
Speaker Change: Okay, Thanks, and if I could just as a follow up on updated thoughts around licensing well with the Allison.
Speaker Change: A large language models using our stock without offering cash or traffic is GAAP compensation.
Speaker Change: So legal action or what the strategy is we saw kind of at Tech media company.
Speaker Change: Meaningful cash or meaningful traffic I should say is competition.
Speaker Change: Yesterday.
Speaker Change: Byelection and call out Google in particular for taking traffic away and you talk to you.
Speaker Change: Thanks, a lot that's not correct.
Speaker Change: Yes.
Speaker Change: Vivek.
Speaker Change: Yes.
Speaker Change: Up until today kind of repeatedly talked about how you're not seeing that.
Rishi: And the next question is coming from Rishi <unk> from RBC capital markets Ritchie Your line is live.
Speaker Change: Just what are your updated thoughts around partnerships and your approach here.
Rishi: Wonderful. Thanks, so much for taking my question.
Rishi: Really appreciate all the new disclosures, maybe I wanted to go back to that health and wellness business.
Speaker Change: Listen I think that so I can see today's news I think the lower notable.
Speaker Change: News was a week or two ago a court decision.
Rishi: It's been generally a strong strong performer in the past as we think looking forward just given a lot of the concerns around.
Speaker Change: Relating to copyright in fair use that I think was very favorable favorable to copyright owners and look I think that's fundamentally we are open.
Rishi: The biopharma environment advertising, obviously, the new administration.
Speaker Change: And having discussions around licensing agreements that they need to be fair value they need to be long term and I think they need to recognize that it is in fact, a license to copyright.
Rishi: RFK in acquisition, just how should we be thinking about the puts and takes.
Rishi: All the kind of macro factors around that and maybe alongside that if we think about your health and wellness portfolio do you see maybe any holes in that portfolio, where there are opportunities to make smaller tuck in M&A and just brought in.
Speaker Change: Versus in agreement that that that is more focused on.
Speaker Change: You know having people don't come after them copyright violation. So we're gonna play I think we're gonna be patient here I don't think the numbers in any of the numbers you have seen.
Rishi: Our expand the scope of what you're able to do within that sub vertical.
Rishi: Thanks for the question so you're right, obviously, there's been a lot of noise.
Speaker Change: Publicly reported a bat material anywhere for us to feel like we need to move quickly and cut a deal that might be short term beneficial, but not long term.
Rishi: Coming from.
Rishi: The from HHS and from the administration around direct to consumer advertising now this isn't new.
Speaker Change: Appropriate for the company. So look I think we are very.
Rishi: <unk> comes out.
Speaker Change: Very focused on making sure that if you're training at all on our debt.
Rishi: Almost predictably every handful of years I think there are real legal challenges to banning it I think there are frankly pretty vested interest that.
Speaker Change: If you are trading against are not that we need to get fair compensation for that.
Speaker Change: On your other question, which I separate right, which is what's happening in search.
Rishi: <unk> had been successful in making.
Speaker Change: I'd say, a fair amount within the prepared remarks, but I might reiterate one or two statements that that come up with respect to at least our own experience, which is the rate at which AI overviews appear against the queries that matter most to US is still relatively small at 12%. So that's that's the first thing.
Rishi: Really none of that really materialize. So we're not we're not really concerned about it and again a lot of the focus is frankly on TV ads, which is not where we.
Rishi: We play so look it's something we're going to launch and it's like a lot of things that I think they are happening in the world Theres, just a lot of noise and we'll see if it if it in any way materializes, but we don't see that and that's certainly not built into our outlook and as I think as I mentioned, the upfronts, which are on the DTC side are strong.
Speaker Change: But the second thing that I'd point out is that in our analysis of queries, where AI overviews of present or and then I will present today, but we're not present in the past and our search rank remained unchanged. The overall click through rate is also relatively unchanged. So they.
Rishi: The other thing I'll also point out is that you do have a fairly diversified AD business between DTC and direct to provider, where the marketing is against those who write prescriptions, which are positioned physician's assistant and registered nurses and so that certainly hasn't been.
Speaker Change: There are those who argue that the presence of our AI overviews actually enhanced click the rates. There are those who argue that the presence of aio bodies in certain queries detracts from click through rates I think it probably did that detects categorically I think there are many things that evolve on the search engine results page ad placements.
Rishi: An area, where that discussion around potential changes to what is permitted from an advertising point of view that hasnt come up I think with respect to your question around acquisitions at everyday health.
Speaker Change: Other types of.
Speaker Change: Changes Google is experimenting constantly so again I don't I don't see a quibble there for us I morphia quibble around large language models, using our stop without offering us cash or traffic is GAAP compensation.
Speaker Change: 100% agree that moving.
Speaker Change: <unk> pharma is an opportunity for the company and a great example of that frankly is the lizard acquisition this business, which is calorie tracking macro tracking.
Speaker Change: Meaningful cash or meaningful traffic I should say is competition.
Speaker Change: Has been a wildly successful business for us and a great example of how.
Speaker Change: Thanks, a lot that's updated thoughts on that.
Speaker Change: We've been able to accelerate its fiber growth AD growth added product capabilities.
Speaker Change: And the next question is coming from Rishi <unk> from RBC capital markets Rishi Your line is life.
Speaker Change: Through its integration within everyday health, we'd love to do more of those so I think things that are <unk> based.
Rishi: Wonderful. Thanks, so much for taking my question really appreciate all the new disclosures, maybe I wanted to go back to that health and wellness business and obviously, it's been generally a strong strong performer in the past as we think looking forward just given a lot of the concerns around the biopharma environment advertising.
Speaker Change: That appeal to consumers I think would be interesting I think given.
Speaker Change: So the female heavy audience that we enjoy within everyday health I think there are lots of other extensions around.
Speaker Change: In fitness and lifestyle that I think we can absolutely get into food.
Speaker Change: Obviously, the new administration.
Speaker Change: Connected to everyday health and then yes, I think we're going to continue to lean into things that support the pharma marketing ecosystem because that is one of the primary monetization.
Rishi: RFK in that position.
Rishi: Should we be thinking about the puts and takes.
Rishi: Of all the kind of macro factors around that and maybe alongside that if we think about your health and wellness portfolio do you see maybe any holes in our portfolio, where there are opportunities to make even smaller tuck in M&A and just brought in or expand the scope of what you're able to do within that sub.
Speaker Change: Elements within within the category. So we're very excited for the space as Youll see in the disclosures. This has been a very good category for us. It was a flat business in 2024, but we believe we will return to its historic growth rates in 2025. So we're excited for it look on the new segments.
Rishi: Thanks.
Rishi: Well thanks for the question so you're right, obviously, there's been a lot of noise.
Speaker Change: Coming from.
Speaker Change: I know a number of.
Speaker Change: You know the from HHS it from from the administration around direct to consumer advertising now this isn't new DTC comes up.
Speaker Change: People on this call and certainly shareholders have been looking for this and we're excited for the new segment reporting I do think it's a real opportunity.
Speaker Change: For us to show showcased more parts of the business allow you all and investors to better appreciate all of the parts of the company. There is a real richness in these disclosures. So I encourage everyone to spend some time historic five.
Speaker Change: Almost predictably every handful of years.
Speaker Change: There are real legal challenges to banning it I think there are frankly pretty vested lobbying interests that.
Speaker Change: No.
Speaker Change: <unk> three revenue types EBITDA adjusted EBITDA by segment, I mean, Theres a lot here to look at and then ultimately.
Speaker Change: Had been successful in making really none of that really materialized. So we're not we're not really concerned about it and again a lot of the focus is frankly on TV ads, which is not where we.
Speaker Change: I think youll start to see that there are some real market comps for each one of our segments and that as you look at a potential value of.
Speaker Change: We play so look it's something we're going to watch and it's like a lot of things that I think they are happening in the world Theres, just a lot of noise and we'll see if it if it in any way materializes, but we don't see that and that's certainly not built into our outlook and as I think I as I mentioned, the upfronts, which are on the DTC side are strong.
Speaker Change: Each segment and you would have some of those values I think we find that it would be well in excess of the current market value of the company.
Speaker Change: Very helpful. Thank you.
Speaker Change: Thank you. The next question will be from Robert <unk> from Evercore ISI.
Speaker Change: The other thing I'll also point out is that we do have a fairly diversified AD business between DTC and direct to provider, where the marketing is against those who write prescriptions, which are positions physician's assistant and registered nurses and so that that certainly hasn't been.
Speaker Change: Robert Your line is live.
Speaker Change: Great. Thank you.
Speaker Change: Couple in health and wellness just can we get an update on the consumer service provider side of the business. I think you had noted some divergence in trends there last quarter.
Speaker Change: An area where that.
Speaker Change: Upfront buying season strength that youre seeing I think.
Speaker Change: The discussion around potential changes to what is permitted from an advertising point of view that that hasnt come up I think with respect to your question around acquisitions at everyday health I, 100% agree that moving beyond pharma is an opportune.
Speaker Change: You had referenced I think in the commentary or in response to one of the questions. Maybe some reengagement with one of the large brands I think we've also seen some generally some CMO turnover, maybe if you could just talk generally about the engagement with the brands as part of the upfront season.
And last one on the GOP one competitors can you remind us on the exposure. There I think you said in the past, it's pretty low, but just give us a quick update there and then just I'll have one quick follow up I know Glenn. Thank you yeah, no. It's all great questions on health and wellness. So let me my commentary around the upfront of the DTC comment.
Speaker Change: City for the company and a Great example of that frankly is the Loopnet acquisition this business, which is calorie tracking macro tracking.
Speaker Change: Has been a wildly successful business for us and a great example of how.
Speaker Change: We've been able to accelerate its fiber growth ad growth and its product capabilities through its integration within everyday health, we'd love to do more of those so I think things that are based.
Speaker Change: Direct to consumer and I will say that in 2024 as a result of the direct to consumer business fared better than direct provider business, we add headwinds the director to provider business owing to a large market are there that was more the DTP side of the equation.
Speaker Change: That appeal to consumers I think would be interesting I think given.
Speaker Change: So the female heavy audience that we enjoy within everyday health I think there are lots of other extensions around.
Speaker Change: And we believe that reverses itself.
Speaker Change: This is this is part of the business that frankly, we see as a growth part of the business were not as large in this business as others. So with one of our largest if not largest.
Speaker Change: D and fitness and lifestyle that I think we can absolutely get into food that I think connected to everyday health and then yes, I think we're going to continue to lean into things that support the pharma marketing ecosystem because that is one of the primary monetization.
Speaker Change: Advertiser pulls back because of changes in the marketing strategy. It affects our business, maybe more than others, but ultimately I think where we feel like we're in a good place in 2025, both DTC DTP the underlying.
Speaker Change: Elements within within the category. So we're very excited for the space as Youll see in the disclosures. This has been a very good category for us. It was a flat business in 2024, but we believe that we retired two as historic growth rates in 2025. So we're excited for it look on the new segments.
Speaker Change: Products and our ability to reach all of that it's just about we got to win the orders right. We have to win the interest in orders to run the campaign. So it really is about winning those those contracts.
Speaker Change: On the G. L. P. One side it is not a material source of revenue, but we think it can be.
Speaker Change: I know a number.
Speaker Change: Of people on this call and certainly shareholders had been looking for this and we're excited for the new segment reporting I do think it's a real opportunity for us to show showcased more parts of the business allow you all and investors to better appreciate all the parts of the company, there's a real richness in these disclosures so I encourage.
Speaker Change: It actually has.
Speaker Change: Egypt.
Speaker Change: Connection to lose it. So what you are seeing is with lots of payers and even with pharma.
Speaker Change: You need an <unk>.
Speaker Change: Hole to attach a GOP once a prescription.
Speaker Change: Two a lifestyle calorie tracking management App right.
Speaker Change: We want to spend some time historic.
Speaker Change: <unk> segment's three revenue types EBITDA adjusted EBITDA by segment, I mean, theres a lot year to look at and then ultimately.
Speaker Change: This idea of.
Speaker Change: True long term sustainable benefit from <unk>, one around weight loss.
That you really need to not just take that drug you need to be tracking your calories and you need to be tracking consumption activity calorie burn et cetera, and so we're seeing some interesting bundling.
Speaker Change: I think youll start to see that there are some real market comps for each one of our segments and that as you look at our potential value.
Speaker Change: Of each segment and you would have some of those values I think we find that it would be well in excess of the current market value of the company.
Speaker Change: The two and I think that's part of what's driving.
Speaker Change: The lose that business, but we also think there's going to be a fair amount of <unk> advertising.
Speaker Change: Very helpful. Thank you.
Thank you. The next question will be from Robert <unk> from Evercore ISI.
Speaker Change: Available to us in 2025 and beyond.
Speaker Change: Got it and then just quickly going back to the.
Speaker Change: Robert Your line is live.
Speaker Change: Great. Thank you.
Speaker Change: The comments that you made about the sort of historical data sales coming through again could you just unpack that a little bit and maybe give us a sense of how productivity were performed ex.
Speaker Change: A couple in health and wellness just can we get an update on the consumer versus provider side of the business. I think you had noted some divergence in trends there last quarter.
Speaker Change: Some of those one time things that didn't come through in the quarter. Thank you.
Speaker Change: The upfront buying season strength that youre seeing I think.
Speaker Change: You had referenced I think in the commentary or in response to one of the questions.
Speaker Change: Yeah no.
Speaker Change: Before I, even get to that the other thing that.
Speaker Change: Some reengagement with one of the large brands I think we've all seen some generally some CMO turnover, maybe if you could just talk generally about the engagement with the brands as part of the upfront buying season.
Speaker Change: I, probably should have mentioned is and you can see this in the new disclosures three revenue lines at subs other.
Speaker Change: Fair amount of headwind and ads and other worthy and prioritizing the AD business as I as I pointed out it's small it continues to get smaller it is not strategic kind of distract we think detract a little bit from the experience. So that is kind of being managed.
Speaker Change: And last one on the GOP one competitors can you remind us on the exposure there I think you've said in the past, it's pretty low, but just give us a quick update there and then just I'll have one quick follow up on the globe. Thank you Yeah, no. It's all great questions on health and wellness. So so let me my commentary around the Upfronts as the DTC comment.
Speaker Change: In a certain way so we're just.
Speaker Change: <unk> that out.
Speaker Change: It would change the view of what the core business is done but even within the core business. There are there's some lumpy parts of this business and this will happen from time to time, where dollars kind of shift out of one quarter.
Speaker Change: Direct to consumer.
Speaker Change: I will say that in 2024 as a result of the direct to consumer business fared better than direct provider business, we add Edwin the director to provider business.
Speaker Change: Into another I will also say that the.
Speaker Change: Owing to a large market are there that was more that was the DTP side of the equation.
Speaker Change: <unk>.
Speaker Change: We organization was pretty significant when I say significant about 70% of the senior leadership has changed in about 20% of the organization. So when Stephen by who oversees that business, who is a really seasoned high quality executive out of the telecom industry.
Speaker Change: We believe that reverses itself.
Speaker Change: This is this is part of the business that frankly, we see as a growth part of the business were not as large in this business as others. So with one of our largest did not largest.
Speaker Change: Advertiser pulls back because of changes in the marketing strategy. It affects our business, maybe more than others, but ultimately I think where we feel like we're in a good place in 2025, both DTC DTP the underlying.
Speaker Change: Came in he had a real vision for how to reorganize and set this business up to become a really big business and so we supported that we knew there would be some disruption for the year, yes, Q4 types of issues, but the full year. I mean, this was a flattish year. When you look at it that is certainly not the growth rate a bit.
Speaker Change: Products and our ability to reach all of that it's just about we got to win the orders right. We have to win the insertion orders to run the campaign. So it really is about winning those those contracts on the G. L. P. One side. It is not a material source of revenue, but we think it can be.
Speaker Change: <unk>.
Speaker Change: This is going to be an engine for us going forward.
Speaker Change: Only thing I'd add to that and I think we've made it maybe the commentary will steadily maybe I will just be a little bit more specific as you might have noticed several quarters ago, we sort of rediscovered our subscription revenue business to subscription or licensing to highlight the fact that within that revenue. There is some one time upfront recognition of various products that impact several of our businesses.
Speaker Change: It actually has.
Speaker Change: P J.
Speaker Change: Connection to lose it so what youre seeing is with lots of payers and even with pharma.
Speaker Change: Need and in whole to attach a G. L. P. One prescription too.
Speaker Change: And while those numbers arent necessarily enormous.
Speaker Change: We measure.
Speaker Change: Sometimes success on a quarterly basis and a handful of millions of dollars I mean does that mentioned roughly 10 relative to our expectations for this quarter and you can see some of that lumpiness from quarter to quarter, one of the things I highlighted in my remarks was that.
Speaker Change: Two a lifestyle calorie tracking management App right.
Speaker Change: This idea.
Speaker Change: True long term sustainable benefit from G. L P. One around weight loss.
Speaker Change: That you really need to not just take that drug you need to be tracking your calories and you need to be tracking consumption activity calorie burn et cetera, and so we're seeing some interesting bundling.
Speaker Change: Our cyber Martech business had a strong Q1 in 2024, and we expect more of a run rate in 2025. So we see we saw a little bit of that in connectivity in the fourth quarter you see it in other businesses from time to time, sometimes it's a benefit sometimes it is a headwind but at the end of the day the quality of the revenues that underlies subscription.
Speaker Change: The two and I think that's part of what's driving.
Speaker Change: The lose that business, but we also think there's going to be a fair amount of G. L. P. One advertising.
Licensing broadly at over 40% of our overall revenues.
Speaker Change: <unk> available to us in 2025 and beyond.
Speaker Change: More the most attractive elements of our diversity revenue scripts.
Speaker Change: Got it and then just quickly going back to the.
Speaker Change: The comments that you made about the.
Speaker Change: Got it thank you.
Speaker Change: Some historical data sales not coming through again could you just unpack that a little bit and maybe give us a sense of how it's.
Speaker Change: Thank you.
Speaker Change: Thank you. The next question will be from Chris Chris <unk> from UBS, Chris Your line is live.
Speaker Change: Productivity, where it performed X.
Speaker Change: Some of those pay one one time things that didn't come through in the quarter. Thank you.
Chris: Great. Thanks for taking my question.
Speaker Change: Yeah before I, even get to that the other thing to that.
Chris: Just two modeling questions here can you just sort of unpack the drivers of your expectation that cyber and more tactful returned to growth starting in the second half of the year and then just one on EBITDA would be drivers for EBITDA growth. This year and just how we should be thinking about the seasonally seasonal weighting of this is this more seasonally weighted towards <unk>.
Speaker Change: I, probably should've mentioned is and you can see this in the new disclosures three revenue lines at subs other.
Speaker Change: Fair amount of headwind and ads and other working and prioritizing the AD business as I as I pointed out it's small it continues to get smaller it is not strategic kind of distract we think detract a little bit from the experience. So that is kind of being managed.
Chris: You then what youre describing revenue thanks.
Chris: Yes.
Speaker Change: In a certain way so we're just.
Chris: I think first and foremost we're guiding to the overall company performance and we did give some texture to certain elements of the different businesses and I'll give a little bit of extra year, but we're looking at 2025 as a goal in its entirety on the mix of expectations amongst our businesses will inevitably get performance.
Speaker Change: Thing that out.
Speaker Change: It changes the view of what the core business is done, but even within the core business. There are there's some lumpy parts of this business and this will happen from time to time, where dollars kind of shift out of one quarter into another I will also say that the.
Chris: [noise] variations amongst those businesses not only over the full year, but over any given quarters with regards to cyber Mitek. This has generally been a multi year improvement story. If you look at some of the rates of decline going back. The last couple of years and you look in 2024.
Speaker Change: Reorganization was pretty significant when I say significant about 70% of the senior leadership has changed in about 20% of the organization.
So when Stephen by who oversees that business, who is a really seasoned high quality executive out of the telecom industry.
Chris: Gotten better some other businesses inside remarked that we've called out like E. Mail has been performing well others have been performing better, particularly with our cyber security business as we have had a little bit more headwinds in some of our martech businesses. There are there is some lumpiness in this business and some licensing this business there is some large customers.
Speaker Change: Came in he had a real vision for how to reorganize and set this business up to become a really big business and so we supported that we knew there would be some disruptions for the year, yes, Q4 types of issues, but the full year. I mean, this was a flattish year. When you look at it that is certainly not the growth rate of this business.
Chris: In this business, but we do expect at the beginning of 'twenty five to sort of map the end of 'twenty four.
Speaker Change: This is going to be an engine for us going forward.
The only thing I'd add to that and I think we've made it maybe the commentary well subtly maybe I will just be a little bit more specific as you might have noticed several quarters ago.
Chris: A lot of our businesses, we're expecting sort of general improvements over the over the course of the year.
Speaker Change: Sort of redistribute, our subscription revenue business to subscription and licensing to highlight the fact that within that revenue. There is some one time upfront recognition of various products that impact several of our businesses and while those numbers arent necessarily enormous.
Chris: Seasonality seasonality is really driven by the advertising performance marketing businesses heavy in the fourth quarter I think we see that consistently and EBITA margins reflect that because those revenues have high marginal and incremental flow through.
Chris: The bottom line.
Speaker Change: Measure some.
Chris: I mentioned in my remarks Q1.
Speaker Change: Sometimes success on a quarterly basis and a handful of millions of dollars I mean does that mentioned roughly 10 relative to our expectations for this quarter and you can see some of that lumpiness from quarter to quarter, one of the things I highlighted in my remarks was that.
Chris: Sort of a muted expectation both open topline and Bottomline bottomline as for these various reasons and also because we have some spending initiatives to fuel growth in the back of the year and some <unk> spend in other parts of the business that are expected to be spent in the first quarter.
Speaker Change: Our cyber Martech business had a strong Q1 in 2024, and we expect more of a run rate in 2025. So we see we saw a little bit of that in connectivity in the fourth quarter, we see it in other businesses from time to time, sometimes it's a benefit sometimes it is a headwind but at the end of the day the quality of the revenues that underlies subscription.
Chris: And we will see what what the exact timing of that is I think the commentary I'd make about margins is there a strong across the five reportable segments. They vary between a couple of points with either of the businesses. We've had different pockets of challenges, but that called out <unk>, we have a strategy this year.
Speaker Change: Licensing broadly at over 40% of our overall revenues.
Speaker Change: <unk>.
Chris: Taking revenue down to get margins back up we do that in various areas of the business. So again.
Speaker Change: More.
Speaker Change: Attractive elements of board diversity revenue streams.
Speaker Change: Got it thank you.
Chris: Well im happy to provide a little bit more texture, and a little bit more commentary I think we need to go back widen the lens and take a holistic view about what we think the entire enterprise can do over the next 12 months.
Speaker Change: Thank you.
Speaker Change: Thank you. The next question will be from Chris Chris Kantar Itch from UBS, Chris Your line is live.
Speaker Change: Great. Thanks for taking my question.
Chris: Yeah.
Speaker Change: Just two modeling questions here can you just sort of unpack the drivers of your expectation that cyber and more tactful returned to growth starting in the second half of the year and then just one on EBITDA would be drivers for EBITDA growth. This year and just how we should be thinking about the seasonally seasonal weighting of this is just more seasonally weighted towards <unk>.
Bret Richter: Got it thanks Brett.
Speaker Change: Thank you and the next question will be from Shyam Patil from Sig Xiaomi Your line is live.
Speaker Change: Good morning. This is Erin Samuels on for Sean. Thank you for taking our question.
Speaker Change: I just wanted to ask about CNET now that it's been a few months since that deal closed how is the integration there been relative to your expectations and if you can just double click on how that has impacted your AD sales motion across the technology brands that you have that would be really helpful. Thank you.
Speaker Change: Q than what Youre describing revenue thanks.
Speaker Change: Yes.
Speaker Change: I think first and foremost we're guiding to the overall company performance and we did give some texture to certain elements of the different businesses and I'll give a little bit of texture year, but we're looking at 2025 as a goal in its entirety of the mix of expectations amongst our businesses will inevitably get performance.
Yes, thank you for asking the question.
Speaker Change: Really pleased with our progress and we're certainly on or ahead of plan, we're going to market as the CNET group. The most trusted brands in tax CNET eating that PC Mag Mashable light backgrounds <unk>. So it's a pretty it's a pretty compelling lineup and roster of brands, we've combined the sales and marketing.
Speaker Change:
Speaker Change: Variations amongst those businesses not only over the full year, but over any given quarters with regards to cyber more tech. This is generally been a multi year improvement story. If you look at some of the rates of decline going back. The last couple of years and you look at 2024, it's gotten better some of them.
Speaker Change: Teams for both efficiency and go to market effectiveness. So we go to market as CNET group that allows us to leverage our scale and our position within the category. We do maintain distinct editorial teams for each brand. We think it is important that they each have their own independent editorial voices, but we have found some opportune.
Speaker Change: Businesses inside rewards that we've called out like E Mail, we've been performing well others have been performing better.
Speaker Change: Our cyber security business as we have had a little bit more headwinds in some of our martech businesses. There are there is some lumpiness in this business is licensing this business. There are some large customers in this business, but we do expect the beginning of 'twenty five to sort of map the end of 'twenty four.
Speaker Change: <unk> shared services across the editorial teams and more importantly, real areas of cooperation I'll give you. An example at CES this year every year.
Speaker Change: The consumer Technology Association, which puts on CES looks to work with a single publication around what they call best of CES right the best products.
Speaker Change: Why.
Speaker Change: Our businesses were expecting sort of general improvements over that over the course of the year.
Speaker Change: That are on display this year best of CES was done across the sea net group or each of our editorial brands made selections in various categories and Great example of editorial collaboration across our brands and something that makes a real impact within within the marketplace and I can tell you that marketers we're excited to see.
Speaker Change: Seasonality seasonality is really driven by the advertising in performance marketing businesses heavy in the fourth quarter I think we see that consistently and EBITA margins reflect that because those revenues have high marginal and incremental flow through to the bottom line.
Speaker Change: I mentioned in my remarks Q1.
Speaker Change: To see Thats right to see this in a way that supports the industry from a cost point of view.
Speaker Change: Sort of a muted expectation bolts bolt on topline and Bottomline bottomline as for these various reasons and also because we have some spending initiatives to fuel growth in the back of the year. It's indulge me to spend in other parts of the business that are expected to be spent in the first quarter.
Speaker Change: We have already realized the synergies and savings we had planned. So that's very good we've got a terrific leader and Kate Gutmann overseeing the CNET group She's got a great and talented team. So overall I'd say that we're ahead of schedule in delivering kind of this effective five to six times purchase price all the EBITDA as you know which is our target.
Speaker Change: And we will see what what the exact timing of that is I think the commentary I'd make about margins is they're strong across the five reportable segments. They may vary between a couple of points with either of the businesses. We've had different pockets of challenges with that called out <unk>, we have a strategy this year.
The trial achieved within 12 months to 24 months post acquisition I think we're going to be we're going to be there pretty quickly and so we feel very good about the acquisition and it really does strengthen it does put us in a very strong position in one of our important verticals.
Speaker Change: Taking revenue down to get margins back up we do that in various areas of the business. So again.
Verticals.
Speaker Change: That's great. Thank you.
Speaker Change: Thank you.
Speaker Change: Well.
Speaker Change: Happy to provide a little bit more texture, and a little bit more commentary I think we need to go back why did the lens and take a holistic view about what we think the entire enterprise can do over the next 12 months.
Speaker Change: Thank you.
Speaker Change: And there are no other questions in queue. At this time I would now like to hand, the call back to Bret Richter for any closing remarks.
Bret Richter: Thank you Paul and importantly, thank you all for joining the call and your continued interest in the company. We hope that you appreciate.
Speaker Change: Got it thanks Brett.
Speaker Change: Thank you and the next question will be from Shyam Patil from Sig Xiaomi Your line is live.
Bret Richter: Our new disclosures reportable segments, the incremental information and commentary we were able to provide on today's call as usual, we'll be participating in various conferences and events in the coming months hope to see some of you there and we look forward to speaking with you in the future.
Speaker Change: Good morning. This is Aaron Samuels on for Sean. Thank you for taking our question I just wanted to ask about CNET now that it's been a few months since that deal closed how is the integration there been relative to your expectations and if you can just double click on how that has impacted your ad sales.
Bret Richter: Thank you.
Speaker Change: Motion across the technology brands that you have that would be really helpful. Thank you.
Speaker Change: Yeah. Thank you for asking the question, we're really pleased with our progress and we're certainly on or ahead of plan, we're going to market as the CNET group. The most trusted brands in tax CNET Zdnet PC, Mac Nashville light backgrounds, Bys, where it so it's a pretty it's a pretty compelling lineup and roster of Brad.
Speaker Change: And we've combined the sales and marketing teams for both efficiency and go to market effectiveness. So we go to market as seen that group that allows us to leverage our scale and our and our position within the category. We do maintain distinct editorial teams for each brand. We think it is important that they each have their own independent edit.
Speaker Change: Toil voices, but we have found some opportunities for shared services across the editorial teams and more importantly, real areas of cooperation I'll give you. An example at CES this year every year.
Speaker Change: The consumer Technology Association, which puts on CES looks to work with a single publication around what they called best of CES right the best products.
Speaker Change: That are on display this year best of CES was done across the sea net group, where each of our editorial brands made selections in various categories and Great example of editorial collaboration across our brands and something that makes a real impact within within the marketplace and I can tell you that marketers we're excited to see.
Speaker Change: To see Thats right to see this in a way that supports the industry from a cost point of view.
Speaker Change: We have already realized the synergies and savings we had planned. So that's very good we've got a terrific leader and Kate Gutmann overseeing the CNET group She's got a great and talented team. So overall I'd say that we're ahead of schedule in delivering kind of this effective five to six times purchase price all the EBITDA as you know which is our target.
Speaker Change: The trial achieved within 12 months to 24 months post acquisition I think we're gonna be we're gonna be there pretty quickly and so we feel very good about the acquisition and it really does strengthen it does put us in a very strong position in one of our important verticals.
Speaker Change: That's great. Thank you.
Thank you.
Speaker Change: Thank you.
Speaker Change: There are no other questions in queue at this time I would now like to hand, the call back to Bret Richter for any closing remarks.
Speaker Change: Thank you Paul and importantly, thank you all for joining the call and your continued interest in the company. We hope that you appreciate.
Speaker Change: Our new disclosures reportable segments, the incremental information and commentary we were able to provide on today's call as usual, we'll be participating in various conferences and events in the coming months hope to see some of you there and we look forward to speaking with you in the future.
Speaker Change: Thank you. This does conclude today's conference you may disconnect. Your lines at this time and have a lot of it looks like no one out if we're going to join this call.