Ziff Davis, Inc. (ZD) recently announced its second-quarter 2026 financial results, revealing a strategic divestiture of its Connectivity division to Accenture for $1.2 billion. This move marks a significant restructuring, transforming the company into four distinct digital segments. Despite a slight consolidated revenue decrease of 2.7% across these segments compared to the previous year, the company's adjusted diluted earnings per share (EPS) surged by 13.2%, primarily propelled by substantial share repurchases. A key operational highlight was the company's aggressive adoption of AI in engineering, with approximately half of all new code now being AI-generated, significantly boosting productivity and efficiency.
During the earnings call on August 7, 2026, Ziff Davis's Chief Financial Officer, Bret Richter, and Chief Executive Officer, Vivek Shah, detailed the company's financial performance and future strategies. The $1.2 billion sale of the Connectivity business was emphasized as a transformative event, reflecting the underlying value of the company's assets. This transaction was executed at a robust 14.5 times multiple of the Connectivity business's trailing 12-month adjusted EBITDA less capital expenditures, underscoring the strategic foresight behind the sale.
Shareholder returns were a major focus, with the company repurchasing 2.6 million shares for $121.5 million in the second quarter alone, contributing to a year-to-date total of over $200 million and reducing the outstanding share count by nearly 11%. Looking ahead, Ziff Davis plans to allocate a portion of the cash proceeds from the divestiture to settle approximately $200 million in tax obligations and repay $149 million in convertible debt due in November 2026, while still maintaining a strong net cash position.
Operationally, Ziff Davis showcased its commitment to artificial intelligence. Shah reported that 50% of new or updated code is now written by AI, doubling the authorship rate within a single quarter. This AI integration has led to a 24% increase in code shipped compared to the first quarter, achieved with a reduced engineering headcount, demonstrating significant operating leverage. The company anticipates nearly all code to be AI-authored by the end of 2026, shifting the focus of its product workforce towards architecture and innovation.
Segment-wise, the Tech & Shopping division experienced a 5% revenue decline but an 8% increase in adjusted EBITDA, driven by cost-saving measures and growth in off-platform channels like Instagram and TikTok. Gaming & Entertainment saw a modest 1% revenue growth, primarily from record performance at Humble Bundle, despite advertising declines at IGN attributed to a weak video game release cycle. The Health & Wellness segment faced a 5% revenue decrease and a 10% adjusted EBITDA decline due to lower pharmaceutical advertising at MedPage Today, but is expanding its distribution through electronic health record systems and benefiting from growth in the GLP-1 weight loss category. Cybersecurity & Martech posted a 1% growth in both revenue and adjusted EBITDA, led by the strong performance of IPVanish and smtp.com.
The management also addressed the challenges posed by evolving search engine dynamics, noting an increase in Google's AI Overviews (AIOs) in relevant search queries, which now appear in 50% of such queries. This shift has prompted marketers to seek alliances with trusted editorial brands like CNET and PCMag, which were highlighted in Semrush's AI Visibility Index as top-cited information sources. Ziff Davis is actively engaging with these trends by expanding its distribution channels and leveraging its brand credibility in the AI content landscape.
Looking forward, Ziff Davis anticipates sequential revenue growth in the third quarter of 2026, though year-over-year revenue is projected to decline in the low to mid-single digits. Adjusted EBITDA margin percentage is expected to show modest improvement. The company remains focused on disciplined capital allocation, exploring attractive acquisition opportunities, and continuing its share repurchase program, all aimed at enhancing shareholder value.
