Digital media company Ziff Davis (NASDAQ: ZD) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 9.8% year on year to $352.2 million. The company’s full-year revenue guidance of $1.47 billion at the midpoint came in 0.5% above analysts’ estimates. Its non-GAAP profit of $1.24 per share was 4.5% above analysts’ consensus estimates.

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“We are very pleased with our second quarter results, which exceeded expectations and marked our strongest quarterly revenue growth since 2021,” said Vivek Shah, Chief Executive Officer of Ziff Davis.

Company Overview

Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ: ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $1.45 billion in revenue over the past 12 months, Ziff Davis is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels.

As you can see below, Ziff Davis struggled to increase demand as its $1.45 billion of sales for the trailing 12 months was close to its revenue five years ago. This shows demand was soft, a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Ziff Davis’s annualized revenue growth of 2.7% over the last two years is above its five-year trend, but we were still disappointed by the results.

This quarter, Ziff Davis reported year-on-year revenue growth of 9.8%, and its $352.2 million of revenue exceeded Wall Street’s estimates by 4.5%.

Looking ahead, sell-side analysts expect revenue to grow 2.1% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and implies its newer products and services will not lead to better top-line performance yet.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Ziff Davis has managed its cost base well over the last five years. It demonstrated solid profitability for a business services business, producing an average operating margin of 12%.

Looking at the trend in its profitability, Ziff Davis’s operating margin decreased by 5.9 percentage points over the last five years. Even though its historical margin was healthy, shareholders will want to see Ziff Davis become more profitable in the future.

This quarter, Ziff Davis generated an operating margin profit margin of 9.5%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Ziff Davis, its EPS declined by 1.7% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

Diving into the nuances of Ziff Davis’s earnings can give us a better understanding of its performance. As we mentioned earlier, Ziff Davis’s operating margin was flat this quarter but declined by 5.9 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Ziff Davis, its two-year annual EPS growth of 3.1% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q2, Ziff Davis reported adjusted EPS at $1.24, up from $1.18 in the same quarter last year. This print beat analysts’ estimates by 4.5%. Over the next 12 months, Wall Street expects Ziff Davis’s full-year EPS of $6.60 to grow 3.8%.

Key Takeaways from Ziff Davis’s Q2 Results

We enjoyed seeing Ziff Davis beat analysts’ revenue expectations this quarter. We were also happy its full-year EPS guidance outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 6.6% to $33.15 immediately following the results.

Sure, Ziff Davis had a solid quarter, but if we look at the bigger picture, is this stock a buy? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.