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Thank you for holding. We look forward to talking with you soon. Good day, ladies and gentlemen, and welcome to the Ziff Davis Fourth Quarter and Year End twenty twenty four 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. On this call will be Vivek Shah, CEO of Ziff Davis and Brett Richter, Chief Financial Officer of Ziff Davis.

I will now turn the call over to Brett Richter, Chief Financial Officer of Ziff Davis. Thank you.

Thank you. Good morning, everyone. And welcome to the Ziff Davis investor conference call for Q4 and fiscal year twenty twenty four. As the operator mentioned, I am Brett Richter, Chief Financial Officer of Ziff Davis. And I'm joined by our Chief Executive Officer, Vivek Shah. A presentation is available for today's call. A copy of this presentation is available on our website. When you launch the webcast, there is 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.zifdavis. In addition, you'll be able to access the webcast from this site. After completing the formal presentation, we'll be conducting a Q and A. The operator will instruct you at that time regarding the procedures for asking questions. In addition, you could e mail questions to Ziff dot com. Before we begin our prepared remarks, allow me to read the Safe Harbor language.

As you know, this call and the webcast will include forward looking statements. Such statements may involve risks and uncertainties that would cause actual actual results to differ materially from the anticipated results. Some of those risks and uncertainties include, but are not limited to, the risk factors that we have disclosed in our SEC filings, including our 10 ks filings, recent 10 Q filings, various proxy statements and eight ks filings, as well as additional risk factors that we have included as part of the slideshow for the webcast. We refer you to discussions in those documents regarding Safe Harbor language, as well as forward looking statements. In addition, following our business outlook slides are our supplemental materials. Including reconciliation statements for non GAAP measures to the nearest GAAP equivalent. Now let me turn the call over to Vivek, for his remarks.

And good morning, everyone. While we came up a bit short in Q4 against our admittedly sanguine estimates, We nonetheless grew revenues by 5.9% and our adjusted diluted EPS by 10.7% in the quarter. Against those measures, it was our best revenue growth quarter the year, and our highest level of free cash flow generation since the 2021 spin Ziff of Consensus.

We just came up a touch short in a couple of parts of the business adding up to roughly $10,000,000 of revenues falling out of a quarter with nearly $413,000,000 in total revenues. It's very unusual for us to miss our own estimates even slightly and very much view it as an anomaly. We were expecting some upside in our Humble Games portfolio, as well as some bookings in our connectivity business simply did not materialize. In Q4. But none of it diminishes our outlook for 2025. We plan to build on our 2024 full year results which included our highest revenue since 2021.

Importantly, 2024 represented a return to bottom line growth and outstanding free cash flow, which have long been the priorities of the company. Our outlook for 2025 reflects an acceleration of our revenue growth from twenty twenty four's 2.8% to a midpoint for 2025 of 5%. And adjusted EBITDA growth improvement from 2.3% to 6%. We believe there is a meaningful disconnect between the current market value of the company and our strong underlying fundamentals. We're committed to addressing this. And we are hopeful that the new segment reporting structure that we are implementing will aid investors in gaining a better understanding and appreciation of the intrinsic value inherent in our business.

We are transitioning from two to five reportable segments. And we believe this reporting structure better aligns with our strategy and will provide investors with greater transparency into the performance of our key businesses. Specifically we are disaggregating the Digital Media segment into four reportable segments. Technology and Shopping, gaming and entertainment, health and wellness, and Connectivity. The Cybersecurity and Martech segment will remain the same. The Tech and Shopping segment includes brands such as CNET, PCMag, Spiceworks, you tell me not. The Gaming and Entertainment segment comprises IGN Entertainment, and its subsidiary brands including IGN, gamer network and Humble Bundle. The Health and Wellness segment comprises the Everyday Health [indiscernible] And its subsidiary brands including Everyday Health, Baby Center, [indiscernible] lose it. The Connectivity segment comprises Ookla, and its subsidiary brands including Speak Test, Down Detector, route metrics, and at the health. We have provided five years of historical revenue by segment. It's worthwhile spending some time to understand some of the trends and dynamics of each of these segments. Starting with Tech and Shopping, you can see a major spike in revenues And a meaningful This segment far more than any other benefited from people staying home, and shopping online. 2022 and twenty twenty twenty three were very challenging with tough comparisons and a rapidly deteriorating B2B lead gen business.

Overall, the segment declined 25% over that two year period. Segment returned to nearly 10% growth in 2024 with ad growth the tech category, and the addition of CNET, offset by some continued shopping and B2B headwinds. We believe this segment will be our strongest grower in 2025. Especially on the bottom line. With margin expansion in CNET continued growth of our other consumer tech brands and the focus on profitability in B2B. Gaming and entertainment has been a mid single digit grower for a number of years. While it's our smallest segment, it has one of the more balanced monetization models and has a great deal of potential to scale particularly through acquisitions. IGN Entertainment is a leading brand in a growing category. The 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. Health and Wellness has so many exciting elements, including its trusted care access portfolio, which is the leading hospital media network, Its fast growing LOSIT AI driven weight loss and nutrition tracking app and a pharma ad business that just experienced a promising 2025 upfront buying season, and that should benefit from a strong drug pipeline.

Connectivity is our most exciting business. Has been fully retooled in 2024 with an ambition to be a larger scaled enterprise. We undertook a major reorganization which involved combining our Ookala and Ekahau business units to set ourselves up for long term growth. 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. We're also deprioritizing the ad business within connectivity as well as some other non core revenue streams to focus entirely on subscriptions [indiscernible] While there's been no reporting changes to the Cybersecurity 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 maintained a 35% EBITDA margin through disciplined expense management. We believe this segment will return to growth in the second half of twenty twenty five. It was the only segment with declining revenue in 2024. And if we achieve our expectations in 2025, then we will have all five of our segments growing for the first time in a few years. Turning to our AI initiatives. Some of our innovations are receiving market [indiscernible] Our AI powered features in Lose It particularly the voice and photo logging capabilities were recently featured on CNN.

The article specifically highlighted how our AI technology is transforming nutrition tracking, making it as simple as taking a photo of your meal. In addition, the AI job fit analyzer deployed by HealthECareers was recently showcased as an AWS case study. HealthyCareers has reported an 18% increase in engagement with their generative AI powered job search functionality since Q3 twenty twenty four, they've seen a 30% uplift in job applications among users who engage with the AI tools.

While there's been industry discussion about AI's potential impact on search traffic, I want to emphasize a few key points. First, our business model is diversified well beyond traditional traffic monetization. With traffic dependent ad revenues representing roughly 35% of our overall revenues. Second, within our traffic, search represents roughly 40% of our visits. Third, with respect to our search referrals, AI's presence remains limited. AI overviews results are present in just 12% of our top Lastly, our analysis of year over year click through rates specifically comparing queries with similar positions that now include AI overviews there is no material aggregate impact on performance. Given all of the attention and dialogue relating to DEI, think it's important To reiterate, that we view our programs and practices as being entirely value created. But because so much of the dialogue seems to suggest that AI practices are about exclusion, and unfair preferences it's important at this moment that we be very clear about what DEI means at St. Davis. At our company, DEI has always been about fairness, equal opportunity, and belonging. DEI is about finding the best talent, regardless of background or circumstances and ensuring that all can thrive here.

Our work is knowledge work. And DEI is about building our intellectual capital. We're also in the audience business, and therefore it's imperative that we maximize our appeal and reach across a diverse landscape. Simply put, DEI at Sif Davis helps us to drive the best possible business outcomes. With that, let me hand the call back to Brett. Thank you, Vivek. Let's discuss our financial results.

Our earnings release reflects both our GAAP and adjusted financial results for Q4 and fiscal year twenty twenty four. [indiscernible] will focus our discussion today and my commentary will primarily relate to our Q4 twenty twenty four adjusted financial results in their prior period comparisons. Let's turn to Slide seven for the summary of our Q4 twenty twenty four financial results. As Vivek addressed our new reporting structure and the content of Slides four, five and six in his remarks. Fourth quarter twenty twenty four revenue was $412,800,000 as compared with revenue of $389,900,000 for the prior year period, reflecting growth of 5.9%. Fourth quarter twenty twenty four adjusted EBITDA was $171,800,000 as compared with $167,600,000 for the prior year period, reflecting 2.5% growth. Our adjusted EBITDA margin for the quarter was 41.6% Ziff, We reported fourth quarter adjusted diluted EPS of $2.58 This figure reflects a 10.7% increase as compared with our Q4 twenty twenty three adjusted results. Turning to Slide eight. Our fiscal year twenty twenty four total revenue increased 2.8% to $1,401,700,000 as compared with fiscal year 2023. Fiscal year 2024 adjusted EBITDA grew 2.3% to $493,500,000 as compared with fiscal year 2023 adjusted EBITDA primarily reflecting the growth in revenue.

Our adjusted EBITDA margin for fiscal year twenty twenty four was 35.2%, and relatively constant as compared with fiscal year 2023.

Adjusted diluted EPS grew 6.9% to $6.62 as compared with fiscal year 2023 adjusted diluted EPS. Importantly, revenues, adjusted EBITDA and adjusted diluted EPS all reflect year over year growth for both the fourth quarter and fiscal year twenty twenty four. Each as compared with the prior year comparable periods. However, Q4 twenty twenty four revenues fell short of our expectations and the flow through of this shortfall negatively impacted fourth quarter adjusted EBITDA and adjusted diluted EPS.

As Vivek noted, the two most significant contributors to this shortfall were our Humble Games Publishing business and our connectivity business. Humble 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 than certain of our other businesses. As noted on prior calls, we are focused on delivering our existing slate of games and development for release in 2025 and 2026. Connectivity did not see the level of large nuclear deal activity that was expected in Q4, including the absence of certain historical data sales that would have resulted in Q4 revenue recognition. However, we do not see either of these matters as impacting connectivity's future prospects and we look forward to a strong 2025. [indiscernible] Q4 twenty twenty four revenues also reflect certain indirect tax accruals, which were netted against reported revenue. These amounts included the results of an indirect tax audit, which resulted in an unexpected contra revenue item that also impacted adjusted EBITDA. While none of these items were particularly large as compared to the overall scale of our activities, cumulatively and they negatively impacted our Q4 revenue performance.

Overall, 2024 was an important year for the company we return to growth. Fiscal year 2024 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. I will cover certain of those capital allocation decisions in more detail in a moment. Slides nine and ten reflect advertising and performance marketing and subscription and licensing. Slide nine reflects our Q4 and fiscal year twenty twenty four Q4 twenty twenty four advertising and performance marketing revenue grew 10.66% as compared with the prior year period and fiscal year twenty twenty four advertising and performance marketing revenue grew by 4.1% as compared with 2023. Marketing revenues would have grown by 12% in Q4 and five point six percent for all of 2024. The table at the bottom of Slide nine depicts certain net advertising revenue retention and annual twelve month measure was approximately 92% for Q4 twenty twenty four a significant improvement as compared with Q4 twenty twenty three.

In the fourth quarter, Ziff Davis had eighteen ninety nine advertisers within average quarterly revenue per advertiser of more than $135,000 significantly higher than the comparable Q4 twenty twenty three metric. Slide 10 depicts our subscription and licensing revenue performance. Q4 twenty twenty four subscription and licensing revenue grew approximately 1% as compared with the prior year period, and these revenues grew nearly 2% during the last twelve months. The table on the bottom of Slide 10 includes subscription and licensing metrics for the fourth quarter. Total subscription and licensing customers increased to 3,650,000 customers, which includes growth at Humble Bundle and Lose It. Our average quarterly revenue per customer was $40.44 and subscription and licensing churn was 2.83%. With regard to the balance of our revenue, the company's Q4 twenty twenty other revenues declined year over year to $7,500,000 from $10,500,000 in Q4 twenty twenty three. With regard to our balance sheet, please refer to Slide 11. As of the end of Q4 twenty twenty four, we had $5.00 $6,000,000 of cash and cash equivalents and approximately approximately $158,000,000 of long term investments. We also continue to have significant leverage capacity both on a gross and net leverage basis.

As of the end of twenty twenty four, gross leverage was 1.8 times trailing twelve months adjusted EBITDA and our net leverage was 0.7 times at only 0.4 times if you include the value of our long term investments. 2024 was a very active year for our capital allocation activities. First and foremost, 2020 reflected a significant increase in M and A activity as compared with 2022 and 2023. During 2024, we deployed more than $225,000,000 for current and prior year acquisitions. Our cybersecurity and Martech business closed one small acquisition in the fourth quarter marking its first transaction since 2021. As a reminder, during Q3 twenty twenty four, we also completed an exchange offer for $400,900,000 of our 1.75% convertible notes due 2026, As a result of this transaction, we've reduced the gross amount of our outstanding debt by $138,000,000 extended the maturity of $263,000,000 of our debt principal outstanding and reduced the total number of shares underlying our outstanding convertible debt by more than 1,100,000.0 shares.

During 2024, we also deployed more than $185,000,000 in capital to repurchase our common shares. Included in this amount is a repurchase of 3,500,000.0 shares in the open market or approximately 7.6% of our shares outstanding as of the beginning of twenty twenty four. Although we did not repurchase any shares in the open market during the fourth quarter, there are more than 6,200,000.0 remaining shares authorized under our stock repurchase program and we will continue to be opportunistic with regard to future stock repurchases. Our balance sheet is one of our most valuable assets. Particularly in the context of our M and A strategy and our overall capital allocation strategy. We continue to pursue transactions of various sizes across all of our businesses, and we look forward to a significant level of M and A activity in 2025 and beyond. Turning to Slides thirteen and fourteen, which provide certain details relating to our 2025 guidance range. Our guidance range reflects growth in revenue, adjusted EBITDA and adjusted diluted Yes. At both the high end and the low end of each metrics guidance range. 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.

Expect continued growth from our gaming and entertainment business and a significant increase in connectivity's growth. Finally, we believe cybersecurity and Martech will continue to improve. The high end of our guidance for twenty twenty five revenue adjusted EBITDA reflects growth rates of approximately 7.2%, 9.810% as compared with the unaudited results we present today. The low end reflects growth of approximately 2.92.30.3% for revenue, adjusted EBITDA and adjusted diluted EPS, respectively. 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. The midpoint of our guidance reflects mid single digit growth in advertising Ziff performance marketing revenue, Subscription and licensing revenue growth in the low to mid single digits and low teens other 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 compared with the first half. 2025 expected revenue growth is 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 twenty twenty four results reflected a particularly strong quarter for cybersecurity and Martech, and we expect Q1 twenty twenty five to more [indiscernible] the year end 2024 run rate of the business. We also have initiated and are expected to continue certain spending initiatives, which are expected to suppress Q1 twenty twenty five margins as compared with Q1 twenty twenty four. 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 and 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. 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 23.2525.25% Note these rates are expected to fluctuate quarterly. Our guidance does not reflect incremental M and A or additional share repurchases in 2025. However, we plan to continue to maintain an active capital allocation program. 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 [indiscernible] We plan to continue to rely on the free cash flow we generate to support our capital allocation strategy. And as noted earlier, we believe we have substantial leverage capacity to support larger capital allocation initiatives Ziff the right circumstances arise. Following our business outlook slides are our supplemental materials including reconciliations statements for the various non GAAP measures to the nearest GAAP equivalent. Please see Slide 26, which includes a reconciliation of free cash flow to net cash provided by operating activities. Our 2024 free cash flow was more than $283,000,000 significant increase as compared with 2023. As shown on this slide, Q4 twenty twenty four free cash flow $131,000,000 nearly doubled as compared with Q4 twenty twenty three.

Fiscal year 2024 free cash flow reflects 57.5% of our 2024 fiscal year adjusted EBITDA of $493,500,000 These figures include a significant contribution from our TDS business which has a seasonally high level of activity and free cash flow during the fourth quarter. Consistent with 2024, TDS is expected to have significant working capital usage in the first quarter. As Vivek noted, 2024 marked a return to growth for our company. We look forward to continuing that growth in 2025. This call also marks a new presentation of the financial results of our company. We believe this reporting structure will ultimately allow investors to gain deeper insight in 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. 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. With that, I would now ask the operator to rejoin us instruct you on how to queue for questions.

Thank you. We will now be conducting a question and answer And the first question today is coming from Ross Sandler from Barclays. Ross, your line is live.

Great. Thanks guys. Vivek, maybe just to start a question about like the macro environment as we look into 2025. There's a view out there that like some of these AI tools from the walled gardens like Performance Max and Advantage Plus might be kind of increasing the shift into Wall Garden and away from Open Web digital advertising. So it sounds like you guys at least in pharma, are having a good upfront [indiscernible] that this shift that's being described here isn't having too much of an impact, but would just love to hear by category, how things are looking in 2025 at the beginning of the year here and with that 4% to 5% growth rate, for advertising, What underlying organic growth rate are we assuming in there? Thank you very much.

Thanks for the question, Ross. So let me zoom out just a moment in terms of the ad business and in 2024. Q4 was a strong quarter, a little over 10% ad growth. Obviously, CNET helped with 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 ad number, is our B2B business. And as I've talked about in the past, we have a planned reduction in revenue in that business, which will obviously detract from growth rate, but will improve profitability. So that's just something just to keep in mind. That's probably 150 basis points there. Of headwind against growth rates. So how do we feel reasonably good about as a category picking up on the momentum from 2024. Gaming and entertainment again, you can now see this in our new segment disclosures, but really good growth in that segment, particularly on the ad side. We think that's going to continue into next year. So we like that from a category point of view. Health and Wellness was a relatively flat business for us.

In 2024. It's been as you'll see historically a very strong grower. I've talked about some challenges we had with a very large pharma advertiser the upfronts have been pretty strong and so we feel really, really good about that. So look, I mean, it is a category and you got to look at this, categorically, but overall, I would just say that a mid single digit ad growth outlook, at our midpoint is prudent given kind of the experience we've had the last couple of years, I know you didn't ask about the subscription business, but in overall outlook, I do think it's just also worth pointing out that we're going to accelerate our growth from about 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 Cyber and Moretech. So look, there's a lot here. I think we're being 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 each of our large is each of our main ad categories, right? So tech, shopping, gaming, and health we're in a leadership position in each of those. And what I will tell you is that marketers want to balance what they're doing within social networks, what they're doing with search against what they're doing in endemics. And so we view ourselves as being leaders in these endemic categories, which happen to be pretty robust ad category.

So I think we're in a different position. Than the rest of maybe the open web where I think it's more of a programmatic driven, proposition and as you know, programmatic is a small piece of our overall equation. Austin, I think I might add and you used the word macro Ziff you just go beyond advertising and just broaden the lens on economic macro, 2022 and into 2023 global economy and the domestic economy were a headwind.

I would say in 2024 was relatively benign And at the very moment, it's essentially the same, but there's a tremendous amount of dialogue, if 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 continuation, if not, the feared escalation of international activity We've essentially assumed constant for our plan Ziff there are massive Ziff. We obviously have to adjust that.

Thank you.

Thank you. Next question will be from Yigal Arunyan from Citi.

Ygal, your line is live.

Hey, good morning guys. I'll start with capital allocation I guess broadly about focus on M and A, and your leverage and your views as we go through 2025, Ziff not press a little bit more here? I know you've been cautious and patient around the M and A environment. Talk about it picking up and I think you didn't buy back any stock in 4Q. Does that have anything to do with building up for M and A?

What are your thoughts around that? And does how much does Gen AI play into your future targets for M and A this year as well?

Yes, listen, great question. So I'd say, look, remember 2024 was healthy from an M and A point of view. We deployed about $225,000,000 and that's after almost no deal activity in 2023. So do think it's worth noting that things are happening 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 and A versus 2024. And then we're going to start seeing the compounding effects of serial acquisition, which have been a hallmark of this company for a long time, but had been absent for the last several years. The other thing I'm going to say is all five of our divisions, which are our five reportable segments, are actively pursuing deals. That wasn't necessarily the case over the last all five are very focused with respective pipelines that are pretty robust Cybersecurity and Martech did its first deal in Q4 since 2021.

So they were kind of on the sidelines and they are firmly back on the field. 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 that's something that we see as being an attractive opportunity for us. And then you sort of speak to it, I think with your Gen AI, question, valuations in digital media are pretty attractive right now, right? Obviously, we see it reflected in some of the fears that must be attached to our own stock. We're inclined to lean into those fears. We think that our own experience here is that listen, great brands attract audiences from which we can extract multiple rents and that is what we do. And so from our point of view, if we have if we see great brands that may have some struggle from a financial point of view, that's where you're going to see us strike. So look, we have the cash, as we pointed out, we have the borrowing capacity. And look, I think it's a balance between we have been patient, but we're also impatient. Some ways to really get some of these things across the finish line.

And I'm optimistic about anything you'd add? Yes. The only thing I'd add on M and A is that the one element we always have to be patient on is price. There's no success factor in M and A that's more important than what you're paying initially and some [indiscernible] deals get done or don't get done, but we're very, very active in the pipeline and exploring a lot of opportunities and hopefully some of those come to fruition. On capital allocation, 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 But in the three years since this pand, which are the three years I've been here, 2024 is far and away. Our most active capital allocation period. Vivek mentioned the $225,000,000 of M and A, we bought back over $180,000,000 worth of stock retiring over 7.5% of the shares that we started the year with. We paid down some debt in the convertible exchange that we did and deployed another hundred and $35,000,000 of capital. Yes, we do want to maintain our capacity for M and 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 3,500,000.0 shares that we bought back in 2024, our Board increased our authorization in the summer. So we have over 6,000,000 shares currently authorized to execute upon and we'll balance that against all other capital allocation opportunities.

Okay, thanks. And if I could just as a follow-up on updated thoughts around licensing with the LLMs and suing legal action or what the strategy is we saw Got it.

A tech media company yesterday, file action and call out Google in particular for taking traffic away and you're [indiscernible] up until today kind of repeatedly talked about how you're not seeing that. Just what are your updated thoughts around partnerships and your approach here? Thanks.

Listen, I think that so I did see today's news, I think the more notable news was a week or two ago, a court decision relating to copyright and fair use that I think was very favorable favorable to copyright owners. And look, I think that's fundamentally we are open and having discussions around licensing agreements, but they need to be fair [indiscernible] I think they need to recognize that it is in fact a license to copyright. Versus an agreement that that is more focused on 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've seen publicly reported on FAP 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 appropriate for the company. So look, I think we are very focused on making sure that if you're training on our content, if you are retrieving against our content, we need to get fair compensation for that. On your other question, which I separate, right, which is what's happening in search I said 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 appear against the queries that matter most to us is still relatively small at 12%.

So that's the first thing. The second thing I point out is that in our analysis of queries, where AI overviews are present or and then are present today, but we're not present in the past and are search rank remained unchanged The overall click through rate is also relatively unchanged. So there are those who argue that the presence of AI overviews actually enhance click through rates. There are those who argue that the presence of AI overviews in certain queries detracts from click through rates. I think it probably depends categorically. I think there are many things that evolve on the search engine result page.

Ad placements, other types of changes. Google is experimenting constantly. So Again, I don't I don't see a quibble there for us. I more see a quibble around large language models using our stuff without offering us cash or traffic as compensation. Meaningful cash or meaningful traffic, I should say, is compensation.

Thanks a lot. That's And the next question is coming from Rishi Jaluria from RBC Capital Markets. Rishi, your line is live. Wonderful. Thanks so much for taking my question.

Really appreciate all the new disclosures. Maybe I want to go back to the Health and Wellness business. Obviously, it's been generally a strong performer in the past. As we think looking just given a lot of the concerns around biopharma environment, advertising Ziff, obviously, the new administration and RFK in that position. Just how should we be thinking about the puts and takes of all the kind of macro factors around that Maybe alongside that, if we think about your health and wellness portfolio, you see maybe any holes in that portfolio where there are opportunities to make even smaller tuck in M and A I just broaden or expand the scope of what you're able to do within that subvertical [indiscernible] Rishi, thanks for the question. So you're right. Obviously, there's been a lot of noise.

Coming from the from HHS and from the administration, around direct to consumer advertising. Now this isn't new. DTC comes up almost predictably every handful of years. I think there are real legal challenges to banning it. I think there are frankly pretty vested lobby interest that have been successful in making really none of that really materialize. So we're not we're not really concerned about it. Again, a lot of the focus is frankly on television ads, which is not where we play. So look, it's something we're going to watch. It's like a lot of things that I think are happening in the world. There's just a lot of noise. And we'll see if it in any way materializes Ziff. We don't see that. And that's certainly not built into our outlook. And as I think I I mentioned, the upfronts, which are on the DTC side are strong. 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 physicians, physician's assistants, and registered nurses. And so that certainly hasn't been an area where that that discussion around potential changes to what it's permitted from an advertising point of view.

That hasn't come up. Think with respect to your question around acquisitions at everyday health, I 100% agree that moving beyond pharma, is an opportunity for the company and a great example of that frankly is the Luz Ziff acquisition. This business, which is calorie tracking, macro tracking, has been a wildly successful business for us. And a great example of how we've been able to accelerate its subscriber growth, its ad growth, and its product capabilities grew its integration within Everyday Health. We'd love to do more of those. So I think things that are app based, that appeal to consumers, I think would be interesting. I think given So the female heavy audience that we enjoy within everyday health think there are lots of other extensions around you know, beauty and and fitness and lifestyle that I think we can absolutely get into food that I think connect 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 elements within the category. So we're very excited for the space. As you'll see in the disclosures, this has been a very good category for us.

It was a flat business in 2024, but we believe what we'll return to is historic growth rates in 2025. So we're excited for it. Look, on the new segments I know a number of 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. For us to showcase 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 everyone to spend some time historic five segments three revenue types, EBITDA, adjusted EBITDA by segment, I mean there's a lot here to look at. And then ultimately, I think you'll 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 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. Very helpful. Thank you.

Thank you.

Next question will be from Robert Kuehlberg from Evercore ISI.

Robert, your line is live. Great. Thank you. I have a couple on Helpline Elmas. Just could we get an update on the consumer versus provider side of the business? I think you had noted some diversions and trends there last quarter. On the upfront buying season strength that you're seeing, I think you'd 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 just talk generally about the engagement with the brands as part of the upfront buy season. And last one on the GLP-one compounders, 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 on nuclear. Thank you.

Yes. No, so all great questions on health and wellness. So on the my commentary around the upfronts of the DTC comment, direct to consumer.

And I will say that in twenty twenty four's results, the direct to consumer business fared better than direct provider business. We had headwinds in direct to provider business. Owing to a large marketer there that was more that was the DTP side of the equation. We believe that reverses itself. This is a part of the business that frankly we see as a growth part of the business. We're not as large in this business as others. So when of our largest, if not largest, advertiser pulls back because of changes in the marketing strategy. It affects our business maybe more than others. But ultimately, I think we're we feel like we're in a good place in 2025, both DTC, DTP. The underlying products and our ability to reach are all there. It's just about We got a 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 GLP-one side, it is not a material source of revenue, but we think it can be. It actually has strategic connection to lose it. So what you're seeing is with lots of payers and even with pharma, this need and hope to attach a GLP-one prescription to a lifestyle calorie tracking management app.

Right. So it's this idea of the true long term sustainable benefit from GLP-one around weight loss. That you really need to not just take the drug, you need to be tracking your calories and you need to be tracking consumption activity calorie burn, etcetera. And so we're seeing some interesting bundling of the two and I think that's part of what's driving the Luz It business. But we also think there's going to be a fair amount of GLP-one advertising available to us in 2025 and beyond.

Got it. And then just quickly going back to Oopla, the the comments that you made about the some historical data sales not coming through again. Can you just unpack that a little bit and maybe give us a sense of how tonn activity would have performed ex some of those may one time things that didn't come through in the quarter.

Yes, no. And before I even get to that, the other thing that probably should have mentioned. Is and you can see this in the new disclosures, three revenue lines add subs other Fair amount of headwind in Ads and Other. We're de prioritizing the Ad business As I pointed out, it's small. Continues to get smaller It is not strategic, kind of distract we think detracts a little bit from the experience. So that is being managed in a certain way. So we're just parsing that out and it would change the view of what the core business has 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 [indiscernible] the reorganization was pretty significant. When I say significant, about 70% of the senior leadership has changed and about 20% of the organization. So when Stephen Bai, who oversees that business, who is a really seasoned high quality executive out of the telecom industry, 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 had some 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. This is going to be an engine for us going forward. [indiscernible] subtly, maybe I'll just be a little bit more specific is you might have noticed several quarters ago we sort of redescribed 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 aren't necessarily enormous, We measure sometimes success on a quarterly basis in a handful of millions of dollars. I mean Vivek 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 our Cyber Martech business had a strong Q1 in 2024 and we've expect more of a run rate in 2025. So we see we saw a little bit of that connectivity in the fourth quarter.

We see it in other businesses from time to time. Sometimes it's a benefit. Sometimes it's a headwind. But at the end of the day the quality of the revenues that underlies subscription and licensing broadly at over 40% of our overall revenues [indiscernible] the more most attractive elements of our diversity revenue streams Got it. Thank you.

Thank you. The next question will be from Chris Chris Kuntarich from UBS. Chris, your line is live.

Great. Thanks for taking the question. I just have two modeling questions here. Can you just sort of unpack the drivers of your [indiscernible] 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 4Q than what you're describing revenue?

Yes, Chris. I think first and foremost, we're guiding to the overall company performance. And we did give some texture to certain elements to different businesses and I'll give a little bit of text texture here. But we're looking at 2025 as a goal in its entirety of a mix of expectations amongst our businesses and we'll inevitably get performance. Variations amongst those businesses, not only over the full year, but over any given quarter. With regards to Cyber Martech, this has generally been a multiyear 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 the businesses within Cyber Martech we've called out by email have been performing well, others have been performing better because particularly in our cyber security businesses. We have had a little bit more headwinds in some of our MarTech business.

There are there is some lumpiness in this business and some licensing in this business. Some large customers in this business. But we do expect the beginning of twenty twenty four, 2025 to sort of map the end of twenty twenty four. And like a lot of our businesses, we're expecting sort of general improvements over the course of the year. Seasonality, seasonality is really driven by the advertising and performance marketing businesses heavy in the fourth quarter. I think we see that consistently and EBITDA margins were reflect that because those revenues have high marginal and incremental flow through to the bottom line. I mentioned in my remarks Q1 we have sort of a muted expectation both both on top line and bottom line. Bottom line is for these various reasons and also because we have some spending initiatives to fuel growth in the back of the year and some dollars we need to spend in other parts of the business. That are expected to be spent in the first quarter, and we'll see what the exact timing of that is. 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, Within the businesses, we've had different pockets of challenges, but that called out B2B.

We have a strategy this year of taking revenue down to get margin back up. We do that in various areas of the business. So again, it's well 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 do over the next twelve months. Got it. Thanks, Fred.

Thank you. And the next question will be from Shyam Phatou from SIG. Shyam, your line is live. Good morning. This is Aaron Samuels on for Shyam.

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.

Yes. 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 techs. CNET, ZDNet, PCMag, Nashville, Lifecare and SpiceWorks. So it's a pretty it's a pretty compelling lineup and roster of brands. We've combined the sales and marketing 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's important that they each have their own independent editorial 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, 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 that are on display. This year, best of CES was done a across the CNET group, where each of our editorial brands made selections in various categories. A great example of editorial collaboration, across our brands and something that makes a real impact within the market place.

And I can tell you that marketers we're excited to see to see this, right, to see this in a way that supports the industry From a cost point of view, we have already realized the synergies and savings we had planned. So that's very good. Got a terrific leader in Kate Gutman 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 over EBITDA, as you know, which is our target to try to achieve within twelve twenty four months post acquisition, I think we're going to be there pretty quickly. And so we feel very good about the acquisition and it really does strengthen one it does put us in a very strong position in one of our important [indiscernible] That's great. Thank you.

Thank you.

Thank you.

And there are no other questions in queue at this time. I would now like to hand the call back to Brett Richter for any closing remarks.

Thank you, Paul. And importantly, thank you all for joining the call and your continued interest in the company. We hope that you appreciate our new disclosures, reportable segments, the incremental information in 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.

Thank you. Time and have a wonderful day. Thanks, everyone. Is going to join this call.