Ziff Davis, Inc. (ZD) Earnings Call Transcript & Summary

Everyone, Ygal Arounian on the Citi Internet team. With my last of -- I forgot, 13 firesides, so this is very exciting. Thank you for being here for the last one. I got to start my weekend after this. I've got Ziff Davis here with us. We've got Vivek Shah, CEO; and CFO, Bret Richter, thank you so much for being us here -- being with us here guys.

It's great to be here. Thanks.

Thank you.

All right. Let's just start kind of at a high level. A lot has changed over the years for you guys, companies evolved a lot -- gone a lot -- gone through a lot in the past couple of years. If you just kind of give at a high level, what Ziff Davis is, where you guys are focused? What's changed over the past couple of years and where you're focused?

Yes. So Ziff Davis has got a long and storied history. The company was founded nearly 100 years ago originally as a magazine publishing company. But really, it's current incarnation as a digital media and consumer Internet business really starts in 2010. So in 2010, I was involved with a private equity firm in acquiring the first asset of the new Ziff Davis, which was PCMag. So in 2010, we acquired PCMag, revenues were under $20 million a year. In the ensuing 13 years to a systematic acquisition program. We have built the company up from that single brand doing under $20 million of revenue to a company today that does $1.4 billion of annual revenue and close to $0.5 billion of EBITDA. And really, it's been an exercise in identifying digital media and consumer Internet businesses, where we saw a real clear path to value creation, where we saw business model innovation, where we could leverage our technology platforms and really create value. And so today, this is a company that, over the last decade, has grown at a compounded annual growth rate of 25% operating at a mid-30s margin in 7 verticals, which I'm sure we'll talk about, with market-leading brands in each of those verticals. As you do point out, the macro has been challenging, probably the last handful of quarters, but I think if you zoom out and look at what the company has accomplished over the last decade or so, it's been pretty special.

Great. Anything to add to that?

No, that that's largely our summary. I think it's -- what we've collected is a set of brands and businesses in 7 healthy verticals. What I want to -- I joined the company a little over 1.5 years ago, I can't help but note the nostalgia started my career at a subsidiary of Citibank. So it's nice to be back. And -- but that was 30 years ago. And when I looked at the company outside in, it was just about the time of the spin-off of consensus, the spin-off of consensus where the legacy businesses, the founding of this company, which occurred 20 years ago. And when I looked at tech and broadband connectivity and e-commerce, video gaming, health and wellness, marketing technology, cybersecurity, I said these are verticals that are healthy now and are healthy in the future. So the challenge of any company that's participating in healthy verticals is to win. And the company has a long history of winning. Putting aside again digital media, last handful of quarters and whatnot. And it's just a privilege to be part of this and part of the future that we hope to create.

Great. That's a great setup. So you guys have two core segments: advertising and subscription. Advertising is a little bit more than half. But let's start there. And just to kind of get the macro out of the way here, it's been challenging, and we know that. Where is it now? How are you seeing things? How do you feel like your advertisers feel as we kind of head into the second half. Start thinking about we're at back-to-school, but the how's back-to-school, start thinking about holiday, what the environment you feel like right now?

Well, look, I think it's worth unpacking our advertising business and maybe distinguishing it from others in the market. So I think it's helpful to start categorically. So we have 4 main categories of advertising at the biggest one is health. And so within our health vertical, we own Everyday Health, which is a large consumer-oriented health site. We own MedPage, which is a large provider, physician-oriented web property, and then we have BabyCenter and What to Expect, which are leaders in the parenting and pregnancy space. And so those collection of assets have primarily 3 categories of advertising, direct-to-consumer pharma, direct-to-provider pharma, as well as the pregnancy market. Those markets have been good for us. They continue to be good for us. They're growth markets, and they have held up really well. We think the drug pipeline and the cadence around supporting of drug marketing is kind of returning to its historic levels. So we feel really good about the largest vertical we're in. It is an interesting vertical, highly regulated vertical, one in which endemic content really matters a lot. Social media is not how brands will market, particularly pharma brands within the space. Our second vertical is retail, anchored by our RetailMeNot property and a few other properties, Offers.com and some properties, Black Friday and TechBargains. And there, there's been a little bit of a pendulum swing. You've had the COVID bump and you add all of this e-commerce activity. I think we're going back to a more normalized ratio between online and offline. But remember, e-commerce as a concept is up and to the right, right? Increasingly -- and we're seeing that return to its sort of normalcy. So we're feeling fairly optimistic about where that can sit with what you're describing back-to-school and obviously, the holiday shopping season. The third vertical is gaming, and we have IGN, which is the -- really the worldwide leader in video game content. And that is more calendar-driven in terms of release cycles, et cetera. We had a tough comp earlier in this year based on release cycles from last year. But again, those comps kind of move around. I think over -- you take a bigger view, we believe that gaming continues to be a strong area for revenue and revenue growth in advertising. The last category, which is the category that's been, I hate to say nearly all of the problem, but it feels like nearly all the problem, at least mathematically, and that's our tech advertising business. And so we have two parts of that: We have the consumer piece, which is PCMag, Nashville Lifehacker and then the B2B piece, which is Spiceworks. And that has been down significantly. And it's been -- and we're not alone. The tech advertising category has suffered probably maybe the most of any ad category within the Internet and within the broader advertising space. Having said all that -- but it's got -- it's shrunk to the point where it's now single digits of the overall revenue of the company. But I've been in tech advertising since 1995, and I can tell you the pendulum swing. So I think that that's one where we're just going to have to be patient and see the pendulum start to come back and start to see the big marketers spend. A couple of other things about our advertising business, I think worth noting, First is that we are very much performance advertising versus brand advertising. Key distinction is, what we're looking to do is customer generation and real return on ad spend versus brand lift. We tend to think that, that is far more resilient, and I think it's shown that. So while we we've had pressures, I don't think our pressures have been that of the broader market. I think the second thing that I would say is that we're enterprise-oriented in our ad customers. We do not have a small, medium business, long-tail advertising base. And so our focus is really on 2,000 large-scale spenders of ad dollars. And the last thing I'll say is that this has been a -- we are a contextual seller. We sell and place advertising, our advertising products are a function of the content or the tool of the service that you're using at the moment and not a retargeting behaviorally based ad platform, which has a number of things going on in it that really aren't relevant to us. And that is all out of design, by the way. In the end, you can harvest intent signals from prior activities and there's value to that, and that's the behavioral system or you have intent signals then and there, and that's what we are. So if you are researching a multifunction printer or looking at diabetes management or you're in your third trimester of pregnancy. These are important signals that we can use in terms of the way in which we target advertising.

Right. Okay. That's a perfect segue to my next question. So let's dive into that. You're answering it in a large way, but let's get into it a little bit more. So we've got cookie deprecation coming up in all likelihood later next year. Your contextual advertising products, I guess, work outside of the cookie ecosystem. But do you have any exposure to cookies? Does it impact you at all? And can it potentially even be a net benefit with your contextual formats?

Yes. Again, I don't see -- it will be interesting to see how cookie deprecation plays out. But we don't -- it's not as relevant to what we do, right, because we're placing advertising based on context and content. What you have to look at, though, is there's two parts of the advertising business: you've got the targeting and the placement of advertising and then attribution. And so you will watch and I think the ecosystem needs to watch, how does this affect the attribution? How do you know when things work? Now I will say that there are far more sophisticated attribution methodologies that go beyond the cookie, so I'm again, not overly concerned about it. But that would be an area that as we navigate through this, we want to make sure it doesn't create any kind of ecosystem impairment of the ability to answer the question, did it work? What did I get from it? Because we are predicated on advertising that is performing advertising, marketing that is working in marketing.

Okay. So what do you do?

Well, look, I mean, again, I don't believe that what is being planned that the Google level will interfere with attribution. But when you ask, well, how do I think about it? I want to make sure that, that ends up being true. But I'm not concerned about that because a lot of the attribution right now is actually not cookie-based anyway.

Okay. Another big theme within digital advertising to become retail media and you're not -- you don't have retailer websites, but off-site advertising has been -- is an important part of that, too, and that fits in with the contextual world as well. Is that a trend that benefits you guys? Are you working with that?

Well, it's interesting because with RetailMeNot, I mean, a lot of the retail advertising businesses are merchant-specific business. And RetailMeNot is actually merchant-agnostic, we're multi merchant, we work with every major merchant on the Internet. And so when you think about what we see in terms of customers and products they're interested in and whether they're looking to transact and what they're browsing, we actually do sit on a fairly large data set that we have not leveraged in an off-network advertising business. It could be an opportunity.

Okay. The biggest theme probably within digital advertising...

Don't say AI.

Well then we can wrap up. We're going to have to talk about AI, You guys actually had some really interesting things to say about AI on your earnings call. So I want to dive into that. I think one of the biggest fears when this kind of burst onto the scene. Actually, I remember -- I think I had my first conversation on ChatGPT with you like right when it came out but one of the big fears from investors has been that it's going to totally upend the digital publishing ecosystem. People spend more time within the search environment, less time on publishers. You guys shared some data on your earnings call that refuted that. So could we walk through that? And if there's anything incremental since then that we could kind of talk about.

Yes. No, look, I think that I can understand the way people may be looking at this. But if you take a step back, there is only one generative AI-based search product in wide circulation and that's Bing. And so what we wanted to do is to share what -- with the marketplace, what we were seeing, which was very positive. So the traffic referrals from Bing to our properties since the launch of the GenAI Bing are up 60%. And that's a pretty significant growth in referrals. Now again, Bing is small market share wise, but it is the only in wide circulation search engine that we can look at. Bing itself, underlying growth is about 19%. So we're seeing outcomes for us that are 3x that of what Bing itself is experienced and very positive. And I think may be surprising to some people. but it's not when you actually look at the experience and understand consumer behavior. So start with the experience. If you look at the generative search component to Bing and to Google's SGE experience, which is in Google Labs and not in wide circulation. Both of them use thumbnails to promote the underlying content that is being used for the generative component. And what that has done is actually move quality publishers up in terms of real estate. And so the fact that we're at the top with a thumbnail, I think, is part of the reason why we're seeing this increased traffic. The second thing is that the generative AI mind versus the traditional search algorithm seems to favor higher quality content can't be gained, the AI mind sits there and says, okay, well, these are leading authorities on these subjects with professional journalists to have worked hard to produce this content, whereas we all know and search and an organic search, you have SEO, and different things can be done to advantage yourself and rank that doesn't seem to apply when AI is looking to find an answer. So in that sense, we may be better positioned with AI-based results versus non-AI-based results. But then there's the more -- and then there's the consumer behavior. Search generates search. It's not how fast can I do it, it's what's this journey I can go through to go from that question, oh, that raises a question to that question. It is a process, particularly for the kind of content. If you've just been told your A1C is 7.2, you're not going to sit there and do one diabetes, prediabetes search and be done, you're going to go on a journey. And the degree to which GenAI actually assists in that journey is only going to create more [ outclips ] to us. And then the last thing I'll say on this is that if there's a group, and let's take the search operators as the group that understands and has always understood the value equation, which is even before crawling for AI and training for AI they were indexing for search. This came up at the beginning of search, which is publisher saying, wait a minute, you can't index our content, read it, present it, show a headline, show some snippets and think you're allowed to do that. And Google famously said, you're right, if you don't want us to do it, just put up and do not crawl, do not index, and we won't. Publishers in the end said, you know what, but if we're going to get traffic out of it, we're not going to put that sign up, and they didn't, no one does. And in fact, they work hard to try to get advantage from an indexation point of view. So I think the search operators have always understood this value equation, which is we're going to get access to your content, you're going to get traffic, that's the trade. And I do believe Microsoft and Google are demonstrating their understanding of that value equation, and of the ecosystem. Where I get more concerned, frankly, are all of the other AI businesses that seem to think that they can build businesses on our copyright content. We, if you look in Common Crawl, which is a well-known repository of tokens, we're one of the largest token providers in the world. people are using Ziff Davis's content to build businesses that Ziff Davis has no economic interest or compensation for. So I join the industry and the view of now that can't continue. But the search operators as a subset, I think, will behave in the right way. I think it's the rest that we're going to have to really contend with because you can't just take our content and rewrite it and present it as your own as a content writing tool for another -- you can't do that.

What's the answer to that?

Well, it's interesting today, Microsoft announced that they're going to indemnify users of co-pilot because users are concerned that copyright owners like us will go after those users because they're using the service built on it, and they said, we understand the concern we're going to indemnify you and I think an understanding of they're going to -- there's going to need to be a compensation scheme. [indiscernible] going to have to be paid, I mean it's simple. I mean it's -- and I think the copyright office in the United States is seeking comment right now. So this is -- it's early days. This came along -- when we had the conversation about ChatGPT, it was in the fall of last year, I think or maybe the summer of last year. It was literally a year ago. Stuff moves quickly, right? So the regulatory frameworks will be there. I am -- the understanding and value of intellectual property in copyright is real. And I don't think you're going to continue to see this. And I think everyone on all sides of this understand that this needs to get sorted out.

Yes. To me, this is one of the most fascinating debates within the whole landscape. What about on the other side in terms of how you can use AI for your content for publishing. Should be a cost component there, too. And then I don't know if you want to tackle separately, but you made an investment in Xyla, I think it ties pretty closely. And so what was that? And how can that -- that's in the health care vertical for now but it could expand so to talk about that.

But, it's -- No, we're very excited about Xyla. So we announced a collaboration framework with a company led by Dr. Daniel Nadler. Dr. Daniel Nadler is one of the top AI minds in the world. His prior company Kensho, was sold to S&P and the largest AI exit at the time, which was a handful of years ago. He's extraordinary. And what he has built at Xyla is an artificial intelligence company that we think can help accelerate a number of different opportunities within our own portfolio. We are starting with the healthcare space. And we're starting with very specifically a tool that Xyla has built, which we will incorporate into our MedPage property, which is really a point-of-care tool for physicians that reads the entirety of the medical literature, which expands at the rate of 2 published papers a second. It is a mammoth copyright-free repository of clinical trial data information and papers that will allow a physician in a very specific use case, patient presents with a certain set of dynamics to type that into this instrument it will read the entire medical literature to find the relevant information relating to it, write it up into a synopsis for the physician. This is done today. It takes a week and you send a resident to go and read a lot of papers and they don't -- they read 5% of what's there and they try to synopsize that. This gets done in seconds. So we think it's a revolutionary tool for physicians. I think our view is to get to mass adoption across the million physicians in the United States, you make it free to physicians supported by advertising versus subscription base through health care systems that takes a long time. There's a lot of friction in that process. So we have access to MedPage, which is a large news and continuing medical education site, platform, brand leverage the fact that we reach physicians. But now we're going to reach physicians in a tool that we think they will use frequently and in the right context, which we think has a lot of value. So there is an example, in my opinion, of using AI in the way it should be, which is to go through clinical trial data and to plumb the medical literature is a real societal value and a real value to the practitioners in health care with a company like ours that has a model of monetization around direct provider advertising and engagement. So that's -- we're super excited. Like that alone, I think, is going is going to be great for our business and our company and our position in the marketplace. But more broadly, when we think about AI opportunities, it's often around the data sets that we have inside of the company. A great example is our Ookla business. We sit on a repository of network data that no one in the world has. How do you use artificial intelligence, machine learning to better derive insights from that data set. So we think a lot about the various data sets. We talked about retail. We see a lot of transactional data across a lot of merchants in a lot of categories. Is there a data analytics and insights opportunity there that we may need to pursue. We own Moz, which is one of the large SEO tools companies that has a significant amount of longitudinal data around sites linking to each other, et cetera, which we had said was -- we actually originally did license to OpenAI in their training process. So I think data is a big one. And then the last thing I'll say is just creating interactive experience is at our properties. So we just launched at IGN. Legend of Zelda is a big game, Legend of Zelda is a complicated game. We have all these maps and game guides and all these ways for you to win the game. We have overlaid a basically a chatbot on top of our content to really help you ask the chatbot, hey, how do I level up in here, and it will go through our data and provide you the answer with a bunch of links and videos, et cetera, et cetera. So I think creating engagement. Where I'm least optimistic is where everyone wants to go, which is, why don't you cut your editorial cost. I don't -- I think we can create efficiencies. I think it can help in process, but it cannot replace the work of a human being, in my opinion, that does this, does the research, does the Q&A, talks to people like that's a process that I just don't see AI replacing. Do I think AI can be helpful in some of the earlier stage outline development, et cetera, maybe headline testing may be? By the way, those things have existed before AI anyway. But no, I don't look at it as, hey, this is going to be a fundamental change in the cost structure of the editorial side of the business.

And maybe if I could just add one thing, just for emphasis, and I think the Vivek's dialogue has already made this emphasis. But when we kicked off this question, we used two words. We used the word investment and we used the word collaboration and we've received some questions about this. Our relationship with Xyla is led by collaboration, everything we just discussed. How do these two companies work together to capitalize on an emerging technology, which has the opportunity to change the way we interact with our customers and provide enhanced benefits over the data we collect. I won't repeat everything that was said but it's a collaboration agreement. We strengthened that collaboration agreement with a small investment. It's not a deviation from our capital allocation strategy. We have the opportunity to bring two companies together to pursue a path of success. And in that dialogue, it became clearer that there was yet another element we could add to this multi-element relationship whereby we make a small investment in the company, [ parts of its ] cash. But we also acquire shares from some of their existing shareholders who in an early-stage company is a benefit to some of those shareholders that have built the company to the state that it's in today. But by using our stock, those shareholders have become shareholders in Ziff Davis, particularly Dr. Nadler, further aligning the incentives of the company -- the respective companies to pursue this path and achieve all we've set out to achieve. So both of those words are key to this relationship, collaboration investment but I would emphasize the former and deemphasize latter.

Great. You read my mind, that was going to be my next question and for being hesitant about AI, those pretty elaborate answers around it, so...

No. No. My early sort of comment was I see it as opportunity. And I think the market can look at it overly simplistically as a threat [ in ] it we just don't see. So to me, whether it's data, whether it's Xyla, whether it's the clinical tool I'm talking about, increased search referrals, I mean, these are lot good things, right? And so it's one where I view it as a great opportunity. So when I say not another -- but everyone is coming at it are often not everyone, but some are coming at it as what's going to -- they're looking at the winners and losers.

Right. I think that's also changing because of these conversations, conversations like this. When it first came out, it was all just a quick who are the winners, who are losers.

The AI is going to write all the stories and search is dead.

Now there's a lot more trying to understand the nuance is and how it all fits together.

And by the way, we do this with all technologies. We overestimate them at the beginning and then we underestimate them long-term.

We did that in a matter of a month.

Yes. We're faster at it now.

All right. Bret, you mentioned capital allocation, and that's a huge part of the story for you guys. So let's talk about that, and then we'll come back and talk about some of the subscription businesses, too. Or the other side of the non-publishing assets because there's subscription there, too. So M&A, a big part of the story. It's been quieter. It's been a tougher environment. You guys target to certain organic growth and certain acquisition growth. Can you talk about that and kind of what's going on in the M&A landscape right now?

Sure. Widening the lens. I think we accept and we manage through it every day, there is a certain degree of complexity in our company on what we do. We're in multiple verticals and multiple products and services. We meet multiple needs in the marketplace. What's not complex is our approach to capital allocation, which starts with a unifying theory that we pursue profitable growth. And I think what sometimes gets lost in our dialogue is our consistent ability to generate adjusted EBITDA, run the business at healthy margins and produce real and meaningful after-tax fully levered free cash flow. We take that after-tax fully levered free cash flow, and we cycle it through our capital allocation program and our capital allocation philosophy, which is really based on 4 pillars. We can reinvest in the business, which we do through both our operating expense on our capital expenditure programs. I think really, it gets almost forgotten, but that's our first capital allocation decision, and we ensure that our businesses have the capital that they need to pursue their opportunities in their respective marketplaces. Next element of capital allocation is to maintain a healthy balance sheet, of which over time, we have very much achieved. And in fact, the company's balance sheet today is probably the strongest balance sheet that it has in its history on a net leverage basis -- or you know the fraction [ of about half a turn ] of leverage. Overall, we set a standard that we don't want to carry leverage in excess of gross leverage EBITDA, extraordinary circumstance for a short period of time, could that be exceeded? Maybe, but we're nowhere near it and have no intention right now of exceeding it. Our two other alternatives are to return capital to shareholders or invest in our M&A program, and we've been very upfront that our preference is to find companies that meet our operating philosophies and fit where we believe that we can enhance the performance of those companies and invest in those companies through our M&A program. Over the last 10-plus years, the ratio of M&A to return capital to shareholders has been almost 10:1 and we will generally pursue that same path and philosophy looking to reinvest our after-tax free cash flow and the acquisition of businesses that we believe can create excess returns over the medium- to long-term. the last 18-plus months, that philosophy has been challenged by the marketplace. We continue to see a disconnect between valuation expectations between buyers and sellers, cost of capital have risen. Certain of our brethren businesses and the broader ecosystems in which we operate have seen pressure on their top line due to the pressure in digital advertising broadly for all the reasons we've discussed and maybe specific in their own business. But our general philosophy is patience is an invaluable attribute and sitting on a little excess capital for a period of time while we pursue transactions will ultimately be rewarded versus feeling the pressure to deploy that capital in the shorter term, of which 18 months or however you measure it, it's even less. We were active in the first half of 2022, certainly more active than we've been in the last 12 months. So we'll be rewarded. So recently, we've reallocated an incremental portion of our capital to share repurchases. We announced about $70 million in the second and the beginning of the third quarter when we announced our results about 6 weeks ago. But we'll continue to plot along this path patiently and in pursuit of long-term shareholder value generation.

Okay. Great. Our next 6 weeks have already -- I mean It's coming up...

5-6 weeks.

Maybe one more just around that idea a little bit on margins and how you think about the right kind of margin versus investment profile for the company.

Yes, it's -- I don't think it's a hard governor. I think we look at our mid-30% margins with a certain degree of pride because not all digital media businesses have had the ability to generate sustained margins in that range. But it's when -- because we -- even internally, we'll get this question from time to time. Ultimately, what matters is dollar margin. Ultimately, what matters is, are we generating cash which is the purest measure of shareholder value creation for a shareholder. But we're very conscious of having businesses that have a meaningful degree of profitability. And generally, not every one of our businesses is spot on mid-30% margins. We have higher, we have lower, we certainly see lower. When we see pressure in the top line, like we have in certain of our sectors, particularly enterprise tech. But profitable growth versus growth at any expense is a governor for our business.

Okay. Great. All right. Let's talk a little bit about the non-publishing assets. You have a number of them, I kind of want to start off by just asking you to pick which one is the most important to you. I feel like that might be a tough thing to do but maybe...

We love all our children.

Yes. That's the answer I was expecting, but...

Well, let's talk about Ookla. So our Ookla business, we also call our connectivity business is our fastest-growing business historically and probably prospectively at the company. And so Ookla owns Speedtest, which is a consumer speed testing application. It's on half of a billion devices worldwide, all organically installed. We've never spent money to get installations of the app, phone and other smart devices and consumers test quite obsessively to see their download and upload and ping and latency and all the data that you get in a speed test. It creates a significant corpus of data. We have RootMetrics, which does drive testing, which literally equips cars with devices to test how networks are performing in motion. We own Downdetector, a leading consumer crowd-sourced service to indicate outages in services, another very important data set. And we own Ekahau, which is the leader in WiFi design and deployment. In a room like this, there are wireless access points. Those wireless access point configuration and deployment is done a majority of the time through us, we are the market leader. So all of that brings together a corpus of data that gives us an insight into network performance and connectivity opportunities for improvement that is very unique and essential, we believe, to the broadband marketplace, fixed and wireless who are looking to continue to improve their services as there is more and more demand for broadband. And so broadband I say often is this almost like oil in terms of the at least global economy. You cannot function individually or as a business without high-quality Internet and connectivity. That's what this company does, it's a data company, primarily an analytics company, and one where when we think about artificial intelligence, plumbing the volume of data that is [ immense-fully ] permissioned data. It is immense and to go and garner insights is pretty extraordinary. I mean, we can literally tell a network owner, how their network is performing at the New York Hilton in Midtown against the competition, against devices, against OS systems. I mean there are a lot of variables that come into place. And so we think it's an exciting company and Stephen Bye, who is our new leader of this business, former CTO of Sprint, former Chief Business Officer at DISH. It's on the Board of DISH, seasoned world-class executive to run this business, I think, tells you the potential that we think it has.

You're monetizing that data today?

Correct.

Directly?

Yes. And through data subscription. So there's a speed test intelligence platform, for instance, that you subscribe to as a customer, corporate customer and you get data, you get visualization, you can get raw feeds, you get a lot.

Okay. Great. Another one that's important on that side is Moz, it's a marketing technology company. I think that one's been a little bit more impacted by the macro as well. So just talk about how that's doing right now and kind of the future growth trend [indiscernible].

No, you know I think -- so the Moz Group is actually doing well. So the Moz Group, it consists of MozPro, which is an SEO tool, iContact and Campaigner, which are e-mail marketing tools and then a couple of smaller sort of voice assets, all SMB tools businesses, subscription-based. And you're right, with Moz which was a reasonably recent acquisition, which was the classic for us a business that operates in the great space wasn't running profitably, reset it to get it to a profitable core and then get to a position of growth. And so we've enhanced it from a profitability point of view and now we're in sort of that growth mindset. But on the e-mail side, we have been growing. That was our project with iContact and Campaigner a few years earlier, which is let's get to that profitable core, let's -- not growth at any cost. A lot of the businesses we find in martech were growth-in-any-cost businesses. And for us to park into what Bret was talking about, we're profitable growth. We're not top line and sole orientation, we want to see bottom line growth. It's a really great space, we think, in terms of what SMBs are looking for, and I think we've got some very good assets in it.

Okay. What's the sales channel for that? And then on top of that, what are you seeing from the SMB ecosystem? We had some other SMB-related companies here. We've heard some pretty good things about what they're seeing.

Yes. No, I think it's generally positive. It's mostly online customer acquisition or online to phone based, but that's basically how we do customer acquisition.

Got it. All right. We have a minute left. I don't know if there's any questions. We'll go on to the front.

Great presentation. The -- when I think about the publishing businesses it's ultimately managing online communities to interest in different things. And I look at some companies, primarily in Europe that run events businesses and they appear to have gotten on to this, and that -- are now backing in -- maybe backing back into sort of managing sort of publishing assets alongside traditional face-to-face events. What's your view on that? Does that pose competitive risk? I mean it's -- have you got much sort of physical event exposure within your portfolio of brands? And how could that be expanded?

Yes. No, it's a great question. Look, I think for an events business to translate the energy around an event to reaching 300 million people a month that -- that's hard, right? So I think going that way in, I think it's going to have some challenges unless you're really vertically-focused, trade-focused, B2B, where I think it's a different dynamic, where I think that will work, right, if it's lawyers and it's this and that. In terms of our own, I wouldn't say that we have a large-scale event business, but we use events to support our business. We run MozCon, which is a big event in the SEO world. We just concluded SpiceWorld, which is a big event in the IT world, and IGN activates a Comic-Con and E3 and all the major events in a meaningful way. Those are all to support our brands and support our position and support our sponsors I wouldn't say that we have a preference or a real focus on trying to get into the in-person event-based business.

Great, and that's our time. Thanks, Guys.

Thank you, Ygal. Appreciate it.

Appreciate you guys for joining us.

Thank you.