Ziff Davis (ZD): They Sold One Piece at 11x. The Market Prices the Rest at 3x.

01What Ziff Davis Actually Is

A holding company wearing a magazine brand's name.

Ziff Davis is not really a magazine publisher, though the name (and PCMag) descends from one. It is the former j2 Global: a serial acquirer that spent two decades buying niche digital businesses for cash flow, spun off its fax/cloud unit (Consensus) in 2021, took the Ziff Davis name, and kept CEO Vivek Shah at the helm. The DNA is capital allocation: buy assets cheap, run them for cash, and increasingly, sell them when someone pays more than the public market will.

After the Connectivity sale, four reporting segments remain (FY2025 revenue, per the 10-K and the June 8-K/A pro formas):

Shares of FY2025 remaining-company revenue of ~$1.22B. Also acquired in Q2'26: Popular Science, Dwell, Domino, Business of Home.

02How We Got Here (2021–2026)

2021–22: Post-spin, ZD is a quiet digital compounder. 2023: ad softness exposes cyclicality and the "melting digital media bundle" narrative takes hold. 2024: M&A restarts ("the time is now," Q2'24 call): Gamer Network, CNET. 2025: the underappreciated move: ZD re-cuts reporting into five segments, which is what makes a sum-of-the-parts argument possible at all. Q2'25 is the high-water print (~10% revenue growth, four of five segments growing), then Q4'25 Tech & Shopping falls 18% and cracks the story. 2026: the unlock goes explicit. March 3: Connectivity sold to Accenture for $1.2B, a price above the prior day's entire market cap. June 17: deal closes. The stock runs from a $22.45 52-week low to the mid-$50s, touching $54.95 on July 20.

03Backing Into the Valuation, Part 1: The Stub Math

Rebuilt from the SEC pro formas (8-K/A filed 6/22/26), not vendor data. Vendor "EBITDA" fields understate ZD badly because they miss intangible-amortization add-backs and a non-cash goodwill impairment.

Step	Amount
Market cap (36.8M sh × $51.60, 7/24)	~$1.90B
Cash & equivalents (pro forma 3/31/26)	$1,676.7M
+ Escrow receivable + long-term investments	$137.1M
− Total debt (incl. $148.8M current convertible)	($867.1M)
− Estimated tax on the sale gain	($181.7M)
= Net cash	~$765M (~$21/share)
= Enterprise value	~$1.16B
Remaining-co adjusted EBITDA (FY25, rebuilt)	~$380M (~31% margin)
EV / adjusted EBITDA	~3.0x
Remaining-co free cash flow (FY25 est.)	~$200M (~17% of EV)

EBITDA rebuild: pro forma operating income $104.9M + D&A $199.7M + goodwill impairment $17.6M + stock comp ~$41M + M&A/integration add-backs ~$15M ≈ $378M. Stock-comp split between sold and retained businesses is estimated; the company-defined figure could land $375–385M (2.9x–3.1x). Whole-company 2025 FCF was $288M actual (op cash flow $407M less capex $119M).

Strip out the cash and you are paying ~$31/share for businesses earning ~$380M of adjusted EBITDA. The market just watched one ZD segment transact at ~11x and is pricing the four remaining segments at ~3x. Evercore's $61 target implies re-rating that stub only to ~7–8x, still below the private-market print.

04Backing Into the Valuation, Part 2: The Segment SOTP

ZD discloses segment revenue but not segment EBITDA, so the EBITDA column is estimated. Multiples are private-market marks, not where public no-growth media trades.

Add back the ~$765M of net cash and the SOTP equity value is roughly $3.6–4.5B, or $95–120 per share, against $51.60. The single sharpest line in the whole argument: Health & Wellness alone, growing 11%, in the premium pharma/physician-media vertical (Doximity-adjacent, and Doximity trades north of 20x), is worth ~$1.4B at 10x. That one segment covers the market's implied value for the entire remaining company; at today's price you get Tech & Shopping, Cyber & Martech, IGN, and the cash pile for free.

05The Segments as They Stand (Q1'26)

Segment	FY24→25	Q1'26 YoY	Read
Technology & Shopping	−1.5%	−12.9%	Melting: AI search is eating buying-guide traffic, and the decline accelerated
Cybersecurity & Martech	−1.9%	+3.6%	Turned: was declining, now stabilized
Health & Wellness	+11.0%	+0.2%	Stalled: the biggest segment and the swing factor
Gaming & Entertainment	+1.8%	+7.2%	Growing: record Humble Bundle quarter
Total (continuing ops)	+2.7%	−1.9%	Ex-Tech & Shopping, the company grew ~3%

This table is the bull/bear dividing line. Bears extrapolate the −13% corner across the whole company and call 3x fair. Bulls point out that ~73% of the remaining revenue base was flat to growing, and that management has committed to total continuing-ops growth returning in 2H26 with each successive Tech & Shopping quarter improving year over year. Those commitments get their first test August 6.

06AI: The Bear Case and the Free Option, Same Asset

The irony at the center of ZD: the content AI search is starving is the same content ZD is suing OpenAI over, and the same content peers are now licensing for real money.

The damage (real and measurable)

• A randomized study puts Google AI Overviews at −39.8% publisher clicks; Ahrefs (Feb 2026) measured −58% clicks to the top organic result when an Overview is present.
• Cloudflare crawl data: OpenAI crawls ~1,091 pages per referral it sends back; only ~2.6% of AI-crawler requests ever produce a human visit.
• Per-site reality check: Mashable's Google organic traffic is down ~30% from its 2024 peak, and that was the BEST of ten sites in the study (The Verge, ZDNET and HowToGeek are down 85%+). Google referrals to publishers fell ~33% globally in the year to Nov 2025 (Reuters Institute/Chartbeat).
• Google said on its 7/22 call it has "expanded overviews to more commercial queries," which is precisely PCMag/Mashable buying-guide territory. Publicis's CEO described LLM-driven visits as leaving "no digital trace of a consumer... you're basically blind."
• The exposure, sized by management's own math: ~35% of revenue is traffic-dependent advertising, and search drives ~40-50% of visits, so direct search exposure is roughly 15-20% of revenue. Real, but not the whole company, which is why the damage concentrates in one segment.

The option (also real, and priced by comps)

• Licensing comps: News Corp–OpenAI ~$250M over 5 years; Reddit ~$130M/yr across Google and OpenAI; Dotdash Meredith at least $16M/yr minimum plus variable, plus a second deal in Microsoft's per-use Publisher Content Marketplace; Wiley guiding to more than $50M of AI revenue in FY27. Roughly two dozen publishers have signed with OpenAI alone. ZD has zero disclosed deals: arguably the largest US publisher holdout.
• A plausible ZD licensing bundle at $20–40M/yr would be nearly all margin against ~$380M of EBITDA, and it is in the stub price at zero.
• The lawsuit: Ziff Davis v. OpenAI (filed April 2025, now consolidated into the OpenAI copyright MDL before Judge Sidney Stein, SDNY). The December 2025 ruling let the case advance: contributory copyright infringement and the DMCA claims over stripped copyright-management information survived against both OpenAI and Microsoft (plus a Mashable trademark claim), while the robots.txt circumvention theory died (the court called robots.txt "a mere request," not a technological protection measure) and claims tied to newer models are stayed. Two live motions, neither with a hearing date: OpenAI's motion for judgment on the remaining copyright claims (fully briefed July 14; a grant takes the licensing-forcing option to roughly zero) and a July 9 sanctions motion ZD joined with the NYT and ~20 other publishers over withheld ChatGPT logs, featuring "Project Giraffe," an internal OpenAI tool that detected when ChatGPT reproduced copyrighted text, built after the suits were filed and at odds with OpenAI's claim that searching outputs was impossible. Mediation failed in August 2025; the court's ADR deadline is August 21, 2026. A denial-plus-settlement path sets the template (RELX analysts are already modeling an Anthropic publisher settlement at ~1% of segment revenue as the comp).
• Structural leverage is shifting toward publishers: Cloudflare default-blocks unpaid AI crawlers on ad-bearing pages from September 15, 2026.

07Capital Allocation: The Actual Engine

• Share count: ~44.5M diluted (FY24) → ~41.1M (FY25) → ~36.8M outstanding today. Q1'26 alone: $51.6M repurchased (~1.2M shares), plus ~560K more since April 1.
• Authorization: the board added 10M shares in Feb 2026 (Richter: total available 10.7M); ~9.7M remained as of the Q1 call, about 26% of the entire share count.
• Firepower: ~$765M net cash, plus ~$200M/yr of stub FCF. The $148.8M current convertible likely gets retired with cash (no EV change).
• Stated posture: management has called asset monetization an "ongoing tool," said the market assigns "little additional value" to the remaining assets, and framed the proceeds as flexible capital to address undervaluation. This is a team that spent 2025 hiring outside advisors to "unlock value" and then actually did it.

08In Their Own Words

Pulled from the last eight-plus quarters of earnings calls (FMP transcripts) and recent investor events. Machine transcription; wording spot-checked but treat as near-verbatim.

"In 2021 the company generated $485 million of adjusted EBITDA and the stock hit a high of almost $130. This year the midpoint of our guidance has us generating $523 million of adjusted EBITDA and the stock is currently in the 30s with almost 12% fewer shares outstanding. While the market processes this we will continue to lean into this dislocation."

"The disconnect between the current value of the company and... the true value of the company in our own minds, is probably at the widest it's ever been... we believe every one of our divisions should command a multiple, each of them individually, higher than what is the current Ziff Davis multiple."

The enterprise "is trading roughly three to four times EBITDA."

"Our current stock price implies that we're only getting credit [for] the expected cash proceeds of the Connectivity sale while little additional value is being ascribed to the rest of our assets... The market appears to be penalizing the better-performing businesses in our portfolio for sharing an ownership structure with those that are under pressure."

"There are some real market comps for each one of our segments... as you look at a potential value of each segment... I think we'd find that it would be well in excess of the current market value of the company."

"I'd also say to our sell-side and buy-side analysts, I think if you could go through some of the parts valuation exercise, I think that would be revealing."

"We have also received interest from both strategic and private equity investors in certain of our businesses... You'll recall that in 2021, we undertook a similar process that resulted in the spinoff of our Consensus business... Consensus' post spinoff enterprise value was close to $2 billion."

A "transformative" transaction and "a significant realization of value for shareholders."

"We see this as a pivot from our buy-and-hold past to a future in which active monetization represents a key tool in our pursuit of shareholder value creation."

"We do view asset monetization as a new ongoing tool in our kit... as long as the public market value of our EBITDA remains low, and it does, we're going to continue to pursue asset monetization."

"Our shareholders have been patient. We feel an overwhelming obligation to really reward that patience."

"It continues to stand out as, frankly, the best option for our capital. I mean we could buy this, what we believe is an amazing company, at almost unbelievable multiples."

"Since the end of 2022... we have grown free cash flow by 25%, reduced our gross debt levels by nearly 14% and lowered our year-end shares outstanding by more than 18%."

"I'll quote Ben Graham. The intelligent investor is a realist who sells to optimists and buys from pessimists."

Connectivity proceeds will go to "general corporate purposes" and to "fund robust capital allocation activities."

"I put this into the category of possibly the second mouse gets the cheese. And so I'd rather be patient and understand the market a little bit more before we make commitments that become the framework by which we work with all of the [LLMs]."

"Popular curated data sets used in major large language models significantly favor premium publisher content, prioritizing it between five and nearly 100 times more than general web content collected through Common Crawl."

"Our position is consistent. Both use cases require proper licensing. We will not enter into RAG-focused agreements that compromise our rights to fair compensation for foundational training."

"We anticipate greater clarity on these fundamental licensing questions following the resolution of our ongoing litigation. Once established, we believe this clarity will unlock licensing opportunities and allow us to move forward with agreements that appropriately reflect the full value of our content."

"We did attempt in good faith to address and resolve OpenAI's unauthorized use of our content both in its training activities and in its RAG activities. We didn't get to acceptable terms... Look, frankly, if someone's going to steal, we're not just going to sit by and do nothing."

"As of the first of July, we commenced blocking of known AI bots at the CDN level with partners like Cloudflare... up until that point, we were using robots.txt, and the problem with robots.txt, as we've come to see, is that it's a directive that bots can and have chosen to ignore."

"We did in 2025, roughly $90 million in affiliate commerce commissions related to organic traffic. That was down about $25 million year-over-year, and half of that $25 million was in Q4."

"The one type of traffic that really is hard to replace [is] high-intent consumers who arrive via search looking for a product or a service and then clicking through to make a purchase."

Worth tracking as a series: management's own disclosed figure for how often Google AI Overviews appear on ZD's most important queries went from 8% (Q2'24) to 12% (Q4'24) to over 20% (Q1'25) to 29% (Q3'25), while the framing moved from "we don't see it as a significant change to the search experience" to acknowledging "rank volatility" to the Q1'26 concession quoted above. No updated figure has been disclosed since; that gap is itself an Aug 6 watch item.

"At the start of AI, we were viewing it more as sort of 'copilot.' It is now the pilot... where we would talk 4 quarters out or 5 quarters out, we're now talking weeks out to push product."

They are "not writing content using AI," calling it "a very dangerous proposition."

Earnings-call quotes are from FMP machine transcriptions; conference quotes are from event recaps. Bracketed words are cleanups of obvious transcription artifacts. Full transcripts on file for anyone who wants the context around any quote.

09Positioning: Who Is on the Other Side

Short interest (Nasdaq bi-monthly settlements)

% of float computed on the ~33.2M-share Nasdaq float for consistency; vendors using other float bases show 12.4% (MarketBeat) to higher. Roughly 1 to 1.5 points of the spring rise was the shrinking-float denominator (buybacks); the rest was genuine short adds.

The shape of this series tells the story. Shorts added ~44% from mid-April to mid-June, pressing into the deal close and 52-week highs, peaked at a series high two days before the Accenture close, and then covered 23% in the first half of July as the stock ran to $54.95. Read honestly: part of the July rally was that covering, and the easiest squeeze fuel has partially burned. What remains (~4.4M shares, ~13% of float, ~7.8 days to cover, still up ~38% year over year) keeps the setup two-sided into Aug 6: a clean print meets a shrinking float and a still-elevated short base; a bad print and the shorts who stayed get paid.

The street

Consensus sits between Hold / avg $47.25 (MarketBeat, 9 firms, 7/17) and Buy / avg $49.40 (stockanalysis.com, 5 analysts, 7/24). Either way, at $51.60 the stock trades above the consensus target. That is usually read one of two ways: the targets are stale after the close and PT catch-ups are coming into the print, or the market has already paid for the re-rating. Goldman initiated at Buy in June; Weiss upgraded from Sell to Hold June 1.

The crowd, and the insiders

• Seeking Alpha is split and the site rating is Sell. The freshest bull piece ("Deep Value With Catalysts On The Horizon," Feb 2026) had the stub at ~3.6x FY26 FCF of ~$270M with the strategic review and LLM licensing as catalysts. The freshest bear piece ("Sell The Accenture Pop Before The Core Erodes Further," May 2026) argues the YTD gain is all one asset sale and the erosion spreads to Health next. Nothing substantive published since the close.
• Reddit is silent. No active threads in the value-investing subs in 2026; a March 2025 r/ValueInvesting pitch got zero comments. The one viral ZD thread (2,400+ upvotes) was gamers reacting to IGN's owner suing OpenAI. There is no crowded retail long here; this is an institutional value name with limited mindshare, which cuts both ways.
• Insiders sold small, below current prices, then stopped. ~31K shares (~$1.5M) over three months, all below $47.10, including CFO Richter's 18K at ~$46.88 on June 10. Nothing filed since June 11. Not a thesis-breaker; not a vote of confidence either.

10What to Watch: The August 6 Scorecard

Q2'26 release Thursday Aug 6, 6:00pm ET; call Friday Aug 7, 8:30am ET (Shah and CFO Richter). Graded against management's own Q1 commitments.

Check	Bar	Why it matters
Tech & Shopping YoY	Better than −13%	The 2H26 growth bridge dies on the first step if not
Total revenue YoY	Better than −2%	Sets up the promised 2H return to growth, Q4 > Q3
Q2 buyback dollars	> $51.6M	Deal blackout is over and the cash is in hand; no excuse left
FY26 guidance	Reinstated or not	Continued silence signals more portfolio moves coming
Cash deployment	Any announcement	$1.2B idle since June 17
AI licensing deal	First one ever	Wiley and RELX have proven both the annuity and the settlement comp

Other dated markers

• OpenAI docket: two undecided motions (judgment, fully briefed 7/14; sanctions/"Project Giraffe," filed 7/9) could land any day, and the court's ADR deadline is Aug 21, 2026. The judgment motion is arguably the highest-beta single catalyst on the board, ahead of earnings.
• Sept 15, 2026: Cloudflare default-blocks unpaid AI crawlers on ad-bearing pages, a structural lever for licensing talks that lands before Q3 prints.
• Bi-monthly short-interest settlements: shorts already covered 23% in early July; the 7/31 settlement (published ~Aug 11) shows how much conviction remained into the print.
• Nov 19, 2026: GTA VI launches, a traffic-cycle tailwind for IGN and Humble Bundle into year-end.
• Health & Wellness trajectory: the single biggest swing factor. +11% in FY25, +0.2% in Q1'26. Re-acceleration keeps the SOTP alive; another flat quarter and the "73% is fine" argument starts eroding.