Investment Idea: Ziff Davis, Inc. (JCOM)
Ziff Davis, Inc. (JCOM) - Investment Idea
Price: $142.84 Market Cap: $6.8B
1. Executive Summary
Ziff Davis (JCOM) offers a compelling investment opportunity given its diversified portfolio of high-margin, recurring-revenue software and digital media assets. We believe the company is undervalued considering the potential for organic growth within its existing segments and its proven track record of accretive acquisitions.
2. Investment Thesis
Our bullish thesis centers around several key factors:
- Diversified Revenue Streams & Recurring Revenue Model: JCOM operates across three segments - Fax and Martech; Voice, Backup, Security, and Consumer Privacy and Protection; and Digital Media - providing diversification and resilience against economic downturns. The company generates significant recurring revenue through its cloud services (eFax, VIPRE, KeepItSafe), offering revenue predictability and stability.
- Strong Organic Growth Opportunities: Within the Digital Media segment, properties like IGN, Mashable, and Speedtest benefit from strong brand recognition and growing digital advertising spend, presenting opportunities for organic revenue growth and margin expansion. Specifically, the shift towards digital marketing within the healthcare sector, coupled with assets like MedPageToday and Everyday Health, positions JCOM to capitalize on this trend.
- Accretive Acquisition Strategy: JCOM has a successful history of acquiring and integrating businesses to expand its product offerings and market reach. The company's disciplined approach to M&A, focusing on high-margin, complementary businesses, should continue to drive shareholder value through increased earnings and revenue synergies.
- Shift to a Simplified Organizational Structure: Post spin-off, JCOM can now focus on its core offerings, allowing it to allocate capital more efficiently and potentially unlock hidden value within the business.