Ziff Davis Q3 2026 Earnings: Revenue Declines and Impairments Drive an Operating Loss

Ziff Davis (NASDAQ: ZD) reported Q3 2026 revenue of $289.3 million, down 5.6% from $306.5 million a year earlier, while diluted loss per share from continuing operations widened to $0.85 from $0.39. Broad-based segment declines, higher impairments, and rising operating costs pushed the company into an operating loss, while adjusted EBITDA and cash flow also weakened. Share repurchases reduced the share count enough to keep adjusted diluted EPS nearly flat despite lower adjusted net income.

Core Financial Results

Revenue declined in all four continuing-operation segments. At the same time, operating costs and expenses rose to $322.9 million from $295.1 million, resulting in a $33.6 million operating loss compared with $11.4 million of operating income in Q3 2025.

The GAAP result included a $29.6 million goodwill impairment, up from $17.6 million, and a $14.6 million long-lived asset impairment that was not recorded in the prior-year quarter. However, adjusted results also weakened: adjusted EBITDA fell 16.0%, faster than revenue, and its margin contracted by 3.5 percentage points.

Income and EPS figures reflect continuing operations. Cash flow measures combine continuing and discontinued operations following the sale of the Connectivity business.

Business and Segment Performance

Health & Wellness remained the largest segment but recorded the steepest decline, with revenue falling by approximately $9.8 million. That represented more than half of the companywide revenue decrease of approximately $17.2 million. Gaming & Entertainment had the smallest percentage decline, but no segment delivered year-over-year growth during the quarter.

Management said revenue improved sequentially despite the challenging operating environment, but the release did not provide the prior-quarter segment figures needed to quantify that improvement.

Profitability, Cash Flow, and Balance Sheet

Total operating costs increased by approximately 9.4% even as revenue declined. Sales and marketing expense rose to $126.1 million from $122.3 million, while general, administrative, and other related costs increased to $64.3 million from $47.7 million. Together with the impairment charges, this cost pattern drove the sharp deterioration in GAAP operating margin.

The decline was not limited to noncash impairments. Because adjusted EBITDA excludes goodwill and long-lived asset impairments, its 16.0% decrease and 3.5-point margin contraction indicate that underlying profitability also came under pressure.

Cash generation weakened materially. Q3 operating cash flow was negative $77.1 million, compared with positive $138.3 million a year earlier. Free cash flow was negative $100.1 million, while transaction-adjusted free cash flow was negative $10.0 million. For the first nine months, operating cash flow fell to $41.8 million from $216.0 million, and transaction-adjusted free cash flow declined 61.5% to $50.1 million.

Ziff Davis ended September with $1.41 billion in cash and cash equivalents, up from $573.8 million at the end of 2025. The nine-month period included $1.13 billion of proceeds from business sales following the Q2 divestiture of Connectivity. Current and long-term debt totaled approximately $868.2 million at quarter-end.

The company used approximately $92.0 million for share repurchases and $7.0 million for current and prior-year acquisitions during Q3. Repurchases totaled approximately $265 million through the first nine months of 2026.

A Lower Share Count Buffered Adjusted EPS as Profit Fell

Adjusted net income declined 15.0% to $48.3 million, yet adjusted diluted EPS slipped only 0.7% to $1.39. The difference reflects a substantially smaller denominator: weighted-average diluted shares fell to 33.8 million from 40.6 million, a decrease of approximately 16.8%.

CEO Vivek Shah said the first nine months of repurchases reduced the company’s share count by nearly 14%. This capital allocation helped stabilize adjusted EPS, but it did not prevent the GAAP loss per share from widening because the company remained unprofitable on a continuing-operations basis.

Management Commentary

Shah said the quarter was consistent with the expectations management set in the prior quarter and highlighted sequential revenue growth despite a difficult operating environment. He also indicated that Ziff Davis intends to continue evaluating opportunities to create additional shareholder value, following the Connectivity sale and substantial share repurchases completed during 2026.

Recent Insider Transactions

The supplied insider data showed 56,706 shares purchased across eight transactions and 44,469 shares sold across nine transactions during the previous six months, resulting in net purchases of 12,237 shares. However, nine of the 10 most recent individual records were sales; the remaining record was a derivative-security conversion, and all were reported as direct transactions.

The nine listed sales had a combined reported value of approximately $2.13 million. These records describe the transactions but do not establish the insiders’ reasons for trading.

Risks Investors Need to Watch

• Broad-based revenue contraction: All four segments declined year over year, with Health & Wellness creating the largest absolute drag. Continued weakness across the portfolio would make a return to consolidated growth more difficult.
• Pressure beyond impairment charges: Adjusted EBITDA declined faster than revenue, showing that the deterioration was not solely an accounting effect. Further cost growth alongside lower revenue could keep margins under pressure.
• Weak cash conversion: Q3 free cash flow was negative $100.1 million, and even the transaction-adjusted measure remained negative. Nine-month operating and transaction-adjusted cash flow also fell substantially from the prior year.
• Capital allocation demands: The company repurchased $92.0 million of shares during a quarter with negative free cash flow. Although the cash balance benefited from divestiture proceeds, continued repurchases and acquisitions would use liquidity if operating cash generation remains weak.
• Further asset write-downs: Ziff Davis recorded both goodwill and long-lived asset impairments during the quarter. Additional deterioration in the value of reporting units or assets could produce further noncash charges.

Summary

Ziff Davis’s Q3 2026 results showed pressure across revenue, underlying profitability, and cash flow. Impairments amplified the GAAP operating loss, but the decline in adjusted EBITDA demonstrates that the weakness extended beyond noncash charges. A smaller share count kept adjusted EPS nearly unchanged, while the key operating questions are whether segment revenue can stabilize, margins can recover, and cash generation can improve after a quarter of broad-based declines.