Ziff Davis, Inc. (ZD) Q1 2025 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the Ziff Davis First Quarter 2025 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. A question-and-answer session will follow the formal presentation. [Operator Instructions] On this call will be Vivek Shah, CEO of Ziff Davis; and Bret Richter, Chief Financial Officer of Ziff Davis. I will now turn the call over to Bret Richter, Chief Financial Officer of Ziff Davis. Thank you. You may begin.

Thank you. Good morning everyone and welcome to the Ziff Davis investor conference call for Q1 2025. As the operator mentioned, I am Bret Richter, Chief Financial Officer of Ziff Davis and I am 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.ziffdavis.com. In addition, you'll be able to access the webcast from this site. After completing the formal presentation, we'll be conducting a Q&A. The operator will instruct you at that time regarding the procedures for asking questions. In addition, you can email questions to investor@ziffdavis.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 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-K filings, recent 10-Q filings, various proxy statements and 8-K 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.

Thank you Bret and good morning everyone. We're pleased with our first-quarter results with revenues and adjusted EBITDA, both ahead of our internal estimates. We also believe that Q2 will show accelerating growth and we are reaffirming our full-year guidance which as a reminder reflects revenue growth of 5% and adjusted EBITDA growth of 6% at the midpoint. We continue to be an active buyer of our shares and we're settling into a nice M&A cadence with two acquisitions in Q1, one in early Q2 and another signed last week. Four of our five reportable segments grew in revenues in Q1. Taken together, these four segments which historically were combined into the digital media segment grew over 9%. The fifth segment, Cybersecurity and Martech declined nearly 11%. However, much of that decline relates to certain timing benefits that occurred in the first quarter of 2024. I'd like to share some thoughts about each of our five segments. Starting with Tech and Shopping, revenues grew nearly 18% through the combination of organic growth and M&A and adjusted EBITDA grew nearly 44%. Our bottom-line growth reflects the margin expansion we had planned for CNET, as well as the shift in our strategy for B2B. We've simplified our B2B product offerings and reduced expenses in a shrink-to-grow approach that's working. CES was a great success this past January where we unveiled our new tech media portfolio branding, CNET Group, the clients and agencies at the event. We also partnered with the CTA, the organizers of CES to launch the official Best of CES Awards, reinforcing our category leadership. Gaming and Entertainment revenues grew by nearly 4% with 7% growth in ad revenue, while subscription revenues were slightly down. Our Humble platform had a weaker line-up of game offerings during the quarter. We're focused on improving our merchandizing assortment and securing better IP for future bundles. And we're cautiously optimistic that the June launch of Nintendo Switch two will represent a nice tailwind for the video game ad market. Adjusted EBITDA for Gaming and Entertainment declined in the quarter based on revenue mix and expense timing, which we believe will reverse itself in Q2. Health and wellness grew revenues over 7% and adjusted EBITDA grew by over 12%. Prior to last year, the Health and Wellness business was one of our most consistent growers. We view last year as an aberration and this quarter's growth, as well as a healthy pharma ad upfront as indications of a promising return to high-single-digit growth for the segment. It's also worth noting that the subscription business is now 15% of the segment's revenues, which has been a diversification priority for all of our digital media businesses. Connectivity's revenues grew by 5% with the core part of the business, subscription and licensing growing by 7%. In particular, we saw strong growth from both Speedtest and Downdetector. And with the market adoption and deployment of Wi-Fi 7 in 2025, we believe we will experience increased demand for Ekahau. Connectivity has historically been our fastest-growing segment and we're pleased to see it poised for a re-acceleration in growth in 2025. The margins of this business are industry-leading and continue to impress at over 50%. And we believe this will once again be a Rule of 60 plus data services and software business. Finally, as I mentioned the one segment that did decline in the quarter was Cybersecurity and Martech which fell nearly 11% in revenues partly due to the timing of certain revenues recognized in the prior year's first quarter. Given some of the sequential revenue trends and a small acquisition in early Q2 we still expect to see this segment grow in the second half of the year. We're particularly encouraged by progress in our VPN business where we believe we've stabilized our revenue. And we're now on a trajectory to grow organically. Our advertising markets Tech and Shopping, Health and Wellness, Gaming and Entertainment were strong in Q1 and hold promise for the year. Obviously, there's a meaningful amount of uncertainty in the world right now but we remain cautiously optimistic. Our subscription and licensing businesses are stable and growing nicely in some parts. As we always do we're tightly managing our operating costs and capital expenses. Taken together, we feel confident in our ability to exceed our adjusted even to growth rate year over year. On capital allocation we continue to seek opportunities to further accelerate our EPS growth through share repurchases and acquisitions. On the former, we have bought 4.25 million shares of our stock over the last four quarters representing roughly 10% of our total shares outstanding. In 2021 the company generated $485 million of adjusted EBITDA and the stock hit a high of almost $130. This year the midpoint of our guidance has us generating $523 million of adjusted EBITDA and the stock is currently in the 30s with almost 12% fewer shares outstanding. While the market processes this we will continue to lean into this dislocation. At the same time, this environment is producing compelling acquisition opportunities for us and we're working to ensure that we are positioned to transact. Last year we acquired four businesses. And so far this year we've acquired three have a contract signed on the fourth and have an active pipeline of opportunities across all five of our segments. Looking ahead our focus remains on identifying the most compelling assets within our verticals situations in which we believe we can uniquely generate value leveraging our platforms technology teams and know-how. We prize diversification and you see that in our multiple revenue models of advertising, performance marketing subscriptions and licensing; in our multiple end-markets of consumers small and medium businesses and enterprises; and of course in our multiple digital categories. It's why we seek to pursue businesses established brands that have the proven capacity to adapt. We believe we own the top-tier brands in many of our categories brands that have endured for decades. Moreover we expect to see the compounding effects of serial acquisition and share buybacks restore value in the company and for our shareholders. Our decision to file a lawsuit against OpenAI stems from a fundamental conviction to protect the core principles underpinning quality journalism and the significant investments required to produce it. We are committed to advocating for the establishment of a more balanced and fair digital ecosystem which includes supporting the responsible growth of AI technology. This ecosystem must ensure the long-term sustainability of value for all stakeholders including the consumers who rely on credible information, the publishers who invest in its creation and the advertisers who support its dissemination. This is a principal effort to defend the integrity and value of journalism and our copyrights. We are resourced and positioned to challenge the unauthorized use of our content by companies like OpenAI. We believe that this lawsuit is a crucial step towards fostering a digital environment where intellectual property rights are respected and the contributions of journalists and publishers are fairly recognized and compensated. We encourage everyone to read our complaint. It's full of compelling and important insights. With that I'll hand the call back to Bret.

Thank you, Vivek. Let's discuss our financial results. Our earnings release reflects both our GAAP and adjusted financial results for Q1 2025. My commentary will primarily relate to our Q1 2025 adjusted financial results and their comparisons to the relevant prior period. Please see slide 4 for the summary of our financial results. Q1 2025 revenues were $328.6 million. This reflects revenue growth of 4.5%, as compared with revenues of $314.5 million for Q1 2024. Q1 2025 adjusted EBITDA was $100.2 million, as compared with $100.8 million for the prior-year period. Our adjusted EBITDA margin for the quarter was 30.5%. Note, revenues adjusted EBITDA and adjusted EBITDA margin each exceeded our internal expectations for the first quarter. And our Q1 2025 results reflect a strong start to the pursuit of our 2025 financial goals. We reported first quarter adjusted diluted EPS of $1.14. This figure was essentially in line with our expectations. Q1 2025 adjusted diluted EPS was negatively impacted as compared with the prior-year period by higher net interest expense and higher depreciation and amortization, each primarily related to our 2024 capital allocation activities. Q1 2025 adjusted diluted EPS was also negatively impacted by changes in certain foreign exchange rates, which drove an increase in other loss net. Slide 5 reflects performance summaries for our two primary sources of revenue: advertising and performance marketing and subscription and licensing. Q1 2025 advertising and performance marketing revenue grew 12.3%, as compared with the prior period, while subscription and licensing revenues declined by 2%. Other revenues declined by approximately $2 million in Q1 2025, as compared with the prior-year period primarily reflecting a decline in Humble Games publishing revenues. Slides 6 through 10 reflect the Q1 financial results of each of our reportable segments which Vivek discussed in some detail already. Please refer to Slide 11, as we discuss our balance sheet. As of the end of Q1 2025, we had $431 million of cash and cash equivalents and $167 million of long-term investments. We also have significant leverage capacity on both a gross and net leverage basis. As of the end of the first quarter gross leverage was 1.8 times trailing 12-months adjusted EBITDA and our net leverage was 0.9 times and 0.6 times including the value of our financial investments. During the first quarter of 2025, we deployed more than $39 million of cash for acquisitions and nearly $35 million related to share repurchases including the repurchase of 750,000 shares during Q1 2025 under a 10b5-1 plant. As we had planned for Q1 marked an active quarter for our M&A activity. We closed the acquisition of the Skimm and Maxroll in March and our activity has continued during the first half of the second quarter. We anticipate remaining active in M&A during the balance of 2025. We are also acutely aware of the reduction in our stock price and we continue to believe that our shares are undervalued in the market as compared with the intrinsic value of our underlying businesses. Ziff Davis has long-exercised disciplined capital allocation to drive returns. This includes acting decisively in the M&A market and repurchasing our shares in the open market when buying opportunities arise. To continue driving value for shareholders, we intend to use our existing share repurchase authorization to accelerate our share repurchase activity in the second quarter, while maintaining our robust balance sheet. Turning to Slide 13. We are reaffirming the fiscal year 2025 guidance range that we presented in February 2025. As I noted earlier, our consolidated Q1 results largely met or exceeded our expectations. And to date, we have not experienced any notable negative impact of the expected volatility and instability of the macroeconomic environment. And while we like most companies are exposed to recessionary risks and other macroeconomic disruptions, year to date we have not experienced any measurable negative impacts of the evolving tariff landscape. We started 2025 strong and while a strong start to a fiscal year is often an indication of the potential for strong performance for the balance of 2025 given the uncertainties of the macroeconomic environment, we have simply maintained our guidance. We currently expect growth to improve in Q2 2025 as compared to Q1 2025. And Q2 adjusted EBITDA margins are expected to be similar to, if not slightly below the prior year period, reflecting our plan to continue to invest in our businesses to support the balance of their 2025 goals as well as certain other factors including the acquisition of certain businesses which initially reflect dilutive margins prior to the completion of their integration plans. And as we have noted on prior calls, we plan to continue to focus on the creation of long-term shareholder value and not run the business to achieve short-term quarterly results. Following our business outlook slides or our supplemental materials including reconciliation statements for the various non-GAAP measures to the nearest GAAP equivalents. Slide 20 includes a reconciliation of free cash flow. Q1 2025 reflects a use of free cash flow of approximately $5 million. This result was largely anticipated and primarily reflects four factors. A full quarter of our TDS business which is a significant user of working capital in the first quarter and particularly January a period that was not reflected in our Q1 2024 results. Overall, Q1 2025 reflects an $84 million cash outflow from operations from TDS for the quarter. Q1 2025 also reflects severance expenses related to a voluntary buyout program that we initiated in Q4 2024 as a way to facilitate some productive turnover. Certain M&A-related expenses and interest payments related to our 3.625% convertible notes as Q1 2024 did not reflect any cash interest payments. In Q1 2024, we significantly broadened our disclosure by reporting five segments. As we said at the time, we believe this reporting structure will allow investors to gain deeper insight into each of our reportable segments and give our stakeholders a deeper appreciation of the diversity of our revenue composition, the scale of our businesses, and the strength of their margins. Since this time, we have received requests for additional historical information relating to these segments and we plan to share certain reportable segment level quarterly financial information for the 2023 and 2024 periods in our Form 8-K. We trust that this additional disclosure will facilitate a greater appreciation of the intrinsic value of each of our reportable segments and the discount that our current stock trading level implies when compared with the sum of the parts analysis. In addition to supporting our businesses during the early part of 2025, we've been focused on capital allocation. Our M&A program has been active year-to-date and we plan to continue to take advantage of the opportunity to acquire stock at these levels. Overall, we believe that Q1 2025 was a strong start to the year. And while we continue to monitor risks associated with the macroeconomic environment, our second quarter is off to a solid start. We look forward to the balance of 2025. With that, I would now ask the operator to rejoin us to instruct you on how to queue for questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] And the first question today is coming from Shyam Patil from Susquehanna. Shyam, your line is live.

Hey good morning. This is Aaron Samuels on for Shyam. Thank you so much for taking our question. Maybe first, I just wanted to ask for an update on the overall ad market. Sounds like things were good in 1Q and quarter-to-date trends have been good too, but can you just go a little bit deeper in terms of what you've seen so far quarter-to-date? And then could you share some thoughts on how things could trend in the rest of the year?

Yes, good morning Aaron. Thanks for the question. So, as you point out, look, Q1 was very strong for the ad business, grew a little over 12%. CNET did contribute to that ad growth, but certainly our other consumer tech businesses performed very well. IGN Everyday Health all contributed growth roughly I think 7% as Gaming and Entertainment and Health and Wellness. So, across all of our key verticals -- and I always encourage those who study the company to understand the advertising business in the context of the verticals and categories in which we operate. So, the three, Tech and Shopping, Gaming and Entertainment, and Health and Wellness look reasonably strong. We did have some offsets, but they were planned. And that's largely in the B2B business where as I described in my prepared remarks, we're focused on margin expansion. So, we're walking away from revenues that were unprofitable. And so we see profitability now in that business and that was a really smart decision for us. We think that the trends for the rest of the year continue to be positive. I mentioned in the gaming side potential tailwinds relating to Nintendo Switch 2. With Health and Wellness, which is the vertical where we probably have the best visibility because there is an upfront that takes place with respect to pharmaceutical advertising the upfronts have been good for us. So, look I think that the kind of ad growth that we are looking at should sustain. Now, look at the end of the day if we enter into a recession I think that would obviously change, not just our perspective, but I think everyone's perspective but we don't see any indications of that at this moment.

Great. And if I could just ask a second question back in the prepared remarks, you talked about the opportunity for Connectivity to reaccelerate. What would you say are the top one or two priorities that the team is working on to improve the growth rate there?

It's entirely in the Wi-Fi part of the business. So, the Ekahau part of the business really indexes to wireless access point sales. And so the WAP market last year was pretty bad. Now I think our view in 2025 with Wi-Fi 7. But more broadly, the demand for better wireless networks across enterprises, manufacturing centers, hospitals, universities will continue to be long term very strong. So it's been a near-term issue around, look, if the hardware cycle isn't where we'd like it to be, Ekahau is a software solution that is attached to WAP sales, won't do as well. But we do that more just a little bit of cyclicality in the market. And so the core Speedtest and Downdetector businesses continue to do extremely well. And so we're posting, as we said, 7% in our subscription and licensing business in Q1 without any contribution from the Ekahau business contributing to organic growth. So we expect that's just going to be a further accelerant. So look, I think this has been, and if you look, obviously the historical segment information is now available, this has been a fantastic business for us. Last year, wasn't what we had hoped it was going to be. There was some of this Wi-Fi issue, some major reorganizational and retooling in the business, but we're very excited for it.

Great. Thank you very much.

Thank you. The next question will be from Rishi Jaluria from RBC Capital Markets. Rishi, your line is live.

Oh, wonderful. Thanks so much for taking my questions. Nice to see the disclosures, that's really helpful for us in just getting, gaining more visibility into the business. Vivek, I wanted to, and maybe for Bret as well, I wanted to dive a little bit deeper into kind of assessing some of the potential macro impacts. I think about some of your advertisers and the products they're offering. And so while you may not directly be impacted in the case that tariffs come through and things kind of go back to the reciprocal tariffs once the 90 days are up, I want to better understand how are we, thinking about the impact of that on your customer base. What does that do in terms of advertising demand, in terms of pipeline, even in terms of traffic, right, for some of your properties? Maybe something to understand the puts and takes, and I understand that this will take a while to play out. It's very uncertain, but just any color you could provide us there would be helpful. Thank you.

Yeah. No, it's a great question, Rishi, and we obviously spent a lot of time trying to assess what this could mean. And then obviously, dynamics change fairly frequently in this area. So just with respect to direct impact of tariffs is very low, right? So it doesn't impact our cost; it doesn't impact our business in any meaningful direct way. But I think your question is, well, what is the indirect exposure, right? To the degree to which our revenues are someone else's expenses, and what is happening to their expense base, and what does that mean? So again, I think it's instructive probably to go by vertical. And I will say that in Health and Wellness, we feel optimistic. The tariff discussion is really on generics. Generics aren't part of our advertising base. So again, anything can happen, but in terms of the current, in the current dialogue, we feel fairly well insulated. I think on Gaming and Entertainment, similarly, yes, there's some talk about production expenses, et cetera. But the Gaming and Entertainment space isn't one of the -- it's not physical goods. It's not physical in nature. And so I think digital products generally is reasonably well insulated. And so then it really comes down to Tech and Shopping And again, I think some of the -- there have been exemptions on certain consumer electronics products. So if that were to continue, I think that would be beneficial. But certainly, I think if you start to see significant pressure on the large tech marketers, yes, they're always going to look for ways to manage their P&Ls. But again, we don't see any indication of that. We see a lot of great momentum within the verticals. And then, the final thing I'll say is with Shopping, it's a degree because you have the consumer element of this, and I was trying to think through what that impact may be -- one potential benefit actually is the degree to which consumer products go up in price. The tendency for consumers to seek discounts, cash back deals, and coupons, goes up. And that obviously benefits us with respect to RetailMeNot. So look, it's early. It's certainly something that we watch. It's something that we try to tabletop a little bit, but right now, I think we feel reasonably good.

All right. Very helpful. Thank you.

Thank you.

Thank you. The next question will be from Ross Sandler from Barclays. Ross, your line is live.

Hey, Vivek. You mentioned the upfront for Pharma being pretty strong. Can you just talk broadly about how the pipeline looks for the rest of the year, and then how the other categories went during the upfront? And then, the lawsuit with OpenAI -- so could you just talk about what led us down this path versus licensing? Thank you.

Yeah. So just on the first question, the upfront is actually upfront commitments for the full year. So it gives us a visibility at this point this year versus last year, how much money has been booked and committed. Now these are commitments, right? They can always be un-booked, but it was pretty strong. So we're excited for that, both, by the way, because -- I think this is something that I talked about last year -- we had some challenges on the direct-to-provider pharma side. The direct-to-consumer side has been very strong for quite a bit. But we had one large pharma kind of rotate out of marketing against physicians, providers, script writers. That is not one we're lapping it but two, that's reversing itself. So we're optimistic about the provider side. And it's always instructive right, because if you – and again this is now things that you can kind of parse, when you start to look at the segment information that we're disclosing but the Everyday Health, the consumer business is the second largest – it's right behind Tech and Shopping in terms of our ad franchise. So it's important. We don't have in the other categories – if you were asking, we don't have as much visibility. The contracts are kind of booked quarter-to-quarter. So we can't give you that more of a down-the-line look. With respect to your second question relating to our suit, look we've made clear that our content is highly valuable and that we're going to defend our intellectual property. We did attempt in good faith to address and resolve OpenAI's unauthorized use of our content both in its training activities and in its RAG activities. We didn't get to acceptable terms. And so look legal action was something that was always available to us. I do encourage everyone to read the suit. I think there's a lot that you'll get from it and you'll see from it. It is a copyright infringement suit in chief, but we've got some trademark claims and the DMCA claim. And so look there's a lot here. It's important that we defend our content. We are owners of intellectual property. We are resourced to do this frankly. And so we think this is an opportunity to basically capture monetization and payments that are owed to us. Look frankly if we're going to – if someone's going to steal we're not just going to sit by and do nothing.

Thank you.

Thank you.

Thank you. The next question is coming from Cory Carpenter from JPMorgan. Cory, your line is live.

Hey, good morning. Thanks for the question. I had two. Vivek, you've given some pretty helpful color and stats on just the generative search or lack thereof impact on the business. Could you just give us an update on what you're seeing there? And then secondly on the advertising side, we've heard from some companies a shift from direct sales to programmatic in recent weeks or months. Could you just remind us of your direct programmatic exposure and if you're seeing anything similar? Thank you.

Yes. Great question. So with respect to just GenAI, it's probably worth repeating what we discussed last quarter. So roughly 35% of our revenues depend on traffic. So right there I think this is important because I think that is very different than maybe other similarly situated companies or companies within our industry. So 65% of our revenues are not traffic-based or traffic-dependent. Within traffic, about 40% of it comes from search, right? So you multiply those two, you get to a very different percentage. Now we're talking about really AI Overviews. And so AI Overviews is another percentage. That percentage has gone from roughly 12% to a little over 20% of the top queries that generate – our traffic now generate an AI overview. So I think if you multiply all this it's like a 3% case. And so sometimes I think maybe the attention on AIOs is not commensurate to kind of its importance within our business. And I'll also point out that it's not clear, if AIOs are positive negative or zero sum right? So that's another thing when it comes to clicks. Like I'm not – we're not sure on that. It's hard for anyone to divine and you've heard things from Google that might suggest they're positive. One thing that we have been tracking and now are able to track is how often we're cited in AIOs that appear on the queries that matter to us and it's about a third of the time. So about a third of the time we're getting cited. And presumably, citations in AIOs is a good thing right because it comes with links. So look, I think that – something to watch I think maybe the emphasis is not proportional to kind of its import within the context of the business. And then you had a question I think on programmatic versus direct. As you know or it's worth reiterating our programmatic business is intentionally relatively small inside of our company. In terms of the percentage of revenue that programmatic represents overall, you're probably 3% of the company's revenue. So it's not a big number. And that's really out of design because we've organized our business to be a combination of highly endemic, must-buy, direct programs because we're number one in tech, number one in gaming, number one in health. When you want to go endemic you come to us. I think if you are a broad-based, more general, proposition I think you're selling horizontal and that does lend itself to programmatic. But we're dealing with programs that are pretty involved often custom programs for our clients. And then on the other piece, we have a fair amount of performance marketing, which is not a CPM-based business, which programmatic is. It's more CPA, cost per acquisition; CPL, cost per lead; CPC, cost per click. So you know we're not really a programmatic player in the way that maybe you'll see in some other entities.

Thank you very much.

Thank you.

Thank you. And the next question will be from Ygal Arounian from Citi. Ygal, your line is live.

Hey. Good morning guys. Well that's about capital allocation. You made a few more tuck-in deals this quarter. Just what are you seeing in the M&A market right now given the volatility? And then with where the share price is and then where -- how you guys feel about the valuation of shares? How do you think about buybacks if you bought a little bit more in 1Q than 2Q? And maybe include within all this the desire or ability to lever up to be more aggressive on buybacks and keep the M&A opportunity open. And then just to follow-up on the OpenAI. I'm not sure how much you can comment on this effect but OpenAI also went to the White House a few months ago and trying to push the administration this AI action plan to kind of unburden some legal rules and regulations around copyright for better development of AI. Any thoughts on that? Was that part of your consideration to go down this route? Would love to get any thoughts you have on that if you do have any. Thanks.

Thanks, Ygal. Let me -- it's Bret and I'll take the first part of that question. I think first and foremost, our capital allocation program continues to be very active. And I think you saw that shift in 2024 when we were active on all prongs, both M&A where we deployed $225 million or so of capital, significantly accelerated our share buyback program. And as Vivek that highlighted, we bought 4.25 million shares in the last four quarters tweaking our cap by almost 10%. And as we enter 2025, it's continued. We've talked about the number of deals that we've already consummated and/or signed. And we can never predict the future but based on what we're seeing, we have an anticipation that that will continue in balancing that with continuing to buy back stock, which we both mentioned in our in our prepared remarks. M&A, the overall M&A environment, I'd say is favorable to us in the following respects. One, we have five divisions that are all active and looking at deals. And I think importantly, if you look back over the last handful of quarters, you've seen participation in M&A from certain of our divisions that have been sidelined for a couple of years. Our Cyber and Martech business has participated. Our Gaming and Entertainment business has participated. Last year the absolute dollars were more dedicated towards Tech and Shopping. We've also consummated over a more extended period of time a number of transactions, which have diversified us away from advertising revenue to a subscription revenue. Lose It! falls into that category. TDS falls into that category. And even in our advertising businesses, we found ways to identify businesses that generate interest from their communities in a different way like theSkimm, which is essentially an email business. So I think there's opportunity in front of us. We also see opportunity to find a home for companies that maybe struggling in the current environment. And when we do that sometimes we absorb a P&L that is not quite at the margin that we expect it to be and it takes us several quarters to bring that up to our expected performance. And I think a couple of the deals we've done in the last 12-plus months fall into that category. So overall really active and I think we intend to continue to be active with regards to using leverage. We're thoughtful about that. We have a $350 million revolver. which other than a letter of credit or two is completely undrawn. But taking your widening the lens despite -- we temper our optimism as we've talked about based on our recent performance and our expectations for the year about what's happening in the macro and that factors into our thinking of using leverage as well.

Yes. The only thing I might add before I address the OpenAI question is, look, the evaluations in digital media are attractive, right? And the fears that frankly represent a weight on our stock are also affecting the valuations of others in digital media. So we're inclined to lean into the fears as they relate to us -- and that expresses itself in buybacks -- and as it relates to potential acquisition targets within the industry. So look, if there are going to be fears and we're going to see things at significant discounts, we're going to be buyers on all fronts and we have been. With respect to just the question around OpenAI, look, I think what is heartening are recent developments that are in some other cases. Thomson Reuters won on fair use at the advanced stage summary judgment in the same court we're in, right, the District of Delaware. The New York Times and a couple of other plaintiffs defeated a motion to dismiss brought by OpenAI. So some of these developments are -- give us some confidence. Now, look, litigation is uncertain, right? But our cost/benefit analysis basically suggested that litigation is a prudent course for us to take. This will take a while to play out, right? So we're not sitting here saying that this is going to get addressed overnight but it needs to get addressed. There needs to be finality. In the end, we need to know what the law and the interpretation of the law is.

Thank you. Very helpful.

Thank you.

Thank you. And the next question is coming from Robert Coolbrith from Evercore. Robert, your line is live.

Great. Thanks for taking the question. Going back to the Tech & Shopping trends, it certainly seemed quite robust. But just wondering since we don't yet have the quarterly detail from the prior quarters was there a particular inflection in performance or anything you could maybe tell us about the organic trend? And then when you look at the trends within that business in the quarter and maybe quarter-to-date as well, just wondering if you could talk about the sustainability of that or any perspective you have there whether you're seeing any pull-forward from the consumer or advertisers ahead of tariffs and just any additional commentary there? And then a follow-up on the AIO. Realize it's quite small, but is there any way for you to determine at this point whether there's a conversion benefit? Is the traffic that comes from an AIO page more qualified or productive in any measurable way? Thanks.

Yeah. I'll take that second question first, and then just go back to Tech & Shopping. We don't know. It's a very good point, which is does an AIO click? Is that a more refined click? And does that fact that it's more refined have more value? It's very hard. A lot of the tracking is just not there. This is actually work that our Moz business is working on. It's interesting because the market demand to better understand AIO, the rate of AIO presence, the rate of inclusion in AIO, the performance out of AIO that's actually a data need that can't be addressed through Google Search console, and so now looking for third-party answers. And so in many ways we're getting a lot of customer interest at Moz, because we're in the SEO analytics business there to better understand that. We internally leverage Moz and STAT, which is an enterprise solution within Moz in our company too by the way. So we're lucky that we have some real experts on STAT because we happen to own the business. Look I think on the Tech & Shopping side there's a lot of things going on here clearly. There's a benefit from CNET being in the quarter this quarter versus last year. But PCMag, 10% organic growth in that set of property, so that has done very well. RetailMeNot has been essentially slightly up; it's kind of a flat proposition. And then we have offsets. Remember we have the planned decline significant actually in B2B. That revenue probably fell by one-third but again there was no EBITDA, it was negative EBITDA in Q1 of last year and it is positive EBITDA in Q1 of this year. So lots of puts and takes there, but what I would say is generally positive. And it really is the consumer tax plus RetailMeNot. And again we know what the revenue drag will be from B2B but it is a EBITDA contributor. And so that's where sometimes maybe the revenue growth while very robust would have been in fact more robust if you excluded B2B in that equation.

The only thing I might add there, and we did receive some requests for that historical information, which we will disclose. When you see the quarterly information on our quarterly segment basis, you may see some various up/downs that don't present themselves as clear trends and there's reasons for that. All the reasons that Vivek mentioned; the different components that have different impacts over time including the decline in certain businesses, which we've talked about for an extended period of time and the incremental additions of M&A. But also tying back to some of the other conversation we had earlier on this call is we're not really a price times quantity business where we're just monetizing traffic in the marketplace. And you can see trends based on the macro or others. We're very much first-party, very much campaign-driven. Those campaigns often rise and fall in quarters based on product releases and pharma product releases and gaming. So you will when you see these historical quarters see some up/downs that won't necessarily present as trends.

Got it. Thank you.

Thank you.

Thank you. There are no other questions in the queue at this time. I would now like to have the call back to Bret Richter for any closing remarks.

Well, thank you, Paul. Thank you, everyone for participating in the call and your continued interest. We look forward to continuing to connect with each of you later this quarter in our upcoming conferences. And we hope to see some of you at these events. Thank you again and have a great day.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Have a wonderful day. Thank you for your participation.