Ziff Davis Monetizes Connectivity and Turns AI Into Operating Leverage
A $1.2B divestiture and an AI-authored code ramp mark a decisive shift from media conglomerate to capital-return vehicle.
ZD · Earnings Call · 2026-08-07
The Connectivity Exit and the Capital Return Machine
Ziff Davis’s second-quarter conference call quickly turned into a shareholder-return manifesto. “This is a transformative transaction and a concrete illustration of the quality of our underlying businesses,” “Vivek Shah said of the $1.2 billion sale of the Connectivity business to Accenture” — Vivek Shah, Chief Executive Officer · 2026-08-07. The market has rewarded the move: ZD is up roughly 28% over the past 90 days and 45% year-to-date. Management used the proceeds not to sit on cash but to accelerate buybacks—repurchasing 2.8 million shares in the quarter under a 10b5-1 program and reducing share count nearly 11% in seven months. The capital-return posture is not a surprise to those following prior calls; “we do view asset monetization as a new ongoing tool in our kit” — Vivek Shah, Chief Executive Officer · 2026-05-08, Shah said in May. But this quarter the rhetoric met action: 13 million shares repurchased since 2024, a $121.5M Q2 buyback, and a $1.6B cash balance that will soon absorb the $149M convertible debt due in November. Repurchase of common stock reached $52M in the latest quarter, with management signaling continued open-market purchases as the preferred vehicle to close the gap between share price and intrinsic value. Even with the sale, the company’s core portfolio remains a collection of Licensing revenues and trusted editorial brands. But the financial shape has shifted: Price-to-revenue has compressed from 4.2x in 2015 to roughly 1.1x, and the company is buying back shares at these levels. The balance sheet—post-Connectivity and temporarily elevated by cash on hand—now supports the argument that the market still undervalues the collection of brands, a theme that has dogged the company for years.AI: From Copilot to Pilot
The most striking change in this report is not financial but operational. Shah detailed a firm-wide shift to AI-authored code: “In a single quarter, the share of the code we released that is AI authored has roughly doubled and the majority of new or updated code we released is now written by AI.” “We are currently on track to have nearly all of our code authored by AI before the end of 2026” — Vivek Shah, Chief Executive Officer · 2026-08-07, he said. The company shipped 24% more code in Q2 than Q1 on lower engineering headcount, signaling a new cost lever that should flow to margins in coming quarters. This is a genuine departure from the prior narrative, which was largely about AI as a distribution headwind. The company is now positioning AI as its core productivity driver, not just as a content citation risk. The AI visibility of its brands—CNET and PCMag, for example, being highlighted in Semrush’s AI Visibility Index—is increasingly becoming a monetization angle. “GEO has become kind of the new SEO,” Shah said in the Q&A, tying brand authority to ad demand. The inbox remains another privileged channel; email placements are one of the few traffic sources not disintermediated by AI answers. That strategy, plus the AI-driven product velocity at properties like Humble Bundle and Lose It!, gives the company a foothold in a world where content is consumed across many surfaces.We shipped 24% more code in the second quarter than we did in the first quarter on lower engineering headcount with initial metrics suggesting delivery quality is holding steady. That is operating leverage in the form we described in the last earnings call.