Outfront Media Inc. (OUT) Earnings

Management highlights

### Overall Q2 Performance - Outperformed management's prior expectations, driven by strong customer demand, focused operational execution, and the 2026 FIFA World Cup, which contributed over $35 million of incremental and existing revenue in Q2 (over $50 million total across the tournament). Approximately half of the Q2 World Cup revenue was incremental to baseline business, with $19 million attributed to billboard and $17 million attributed to transit. - Top performing verticals across the business were tech (including fast-growing AI brands), legal, medical/health, entertainment, and financial services. ### Strategic Progress - Transitioning from a legacy out-of-home media vendor to a leading IRL (in real life) platform company, with core investments to strengthen sales, measurement, and digital capabilities. - Added 51 new digital billboard displays in Q2, and is on track to add 125 new digital displays for the full 2026 calendar year. - Completed a refinancing of its $650 million of 5% notes due 2027: issued $500 million of 6% senior unsecured notes due 2034, with the balance funded via cash on hand and draws on its existing accounts receivable facility. - The board of directors approved a 10% increase to the quarterly cash dividend, raising it to 33 cents per share. - Closed approximately $11 million in tuck-in acquisitions during Q2, in line with historical deal pace. ### Strategic Investments for Future Growth - Accelerating digital growth investments: expanding the programmatic sales team with experienced leadership, and hired a new chief data officer to advance audience intelligence, measurement, and attribution capabilities to meet enterprise advertiser expectations. - Investing in workforce enablement: rolling out new tools (including Salesforce, proprietary IRL nav, and an integrated marketing cloud) to reduce repetitive administrative work and increase client engagement time, while expanding HR functions to attract and retain top talent. As a result, SG&A expense growth is expected to outpace revenue growth for the remainder of 2026, to drive stronger growth in 2027 and beyond. - Strengthening the sales engine with AI-enabled CRM, advanced sales training, and the AdQuik AI-native campaign planning platform, which reduces workflow handoffs from audience discovery to proposal creation. ### IRL Media Value Proposition - Management articulated a core strategic thesis that IRL out-of-home media becomes more valuable as AI drives trust erosion in digital channels: infinite supply of AI-generated digital content has reduced consumer trust in digital advertising, while physical out-of-home inventory is geographically and legally scarce, inherently verifiable, and drives higher consumer trust. Kantar research commissioned by the firm found consumers rate identical ads as far more trustworthy on billboards than on social media, and 87% of consumers report they will pay more for brands they trust.

Guidance

- Full year 2026 capital expenditures are expected to remain approximately $90 million (in line with historical levels of ~5% of annual revenue), with $30 to $35 million allocated to maintenance capex. - 2026 reported AFFO is now expected to grow in the low 20% range compared to 2025's reported AFFO of $338 million, including $145 million in expected interest expense and modest cash tax outlays. - Q3 2026 revenue growth is expected to be in the high single digits year-over-year, with ~20% growth in transit and mid-single digit growth in billboards. This forecast includes a $16 million World Cup benefit, split between $9 million for billboards and $7 million for transit. - Full year 2026 acquisition activity is expected to remain in line with recent historical levels, and management will become more opportunistic with deal activity as leverage remains at the low end of its target range and cash flows grow. - The MTA transit franchise expense will continue to be recorded on a straight-line quarterly basis for 2026 and the foreseeable future, per existing accounting guidance following the 2023 impairment charge.

Segment performance

1. Billboard Segment: Reported revenue grew 8% year-over-year; excluding the exited large Los Angeles contract, organic billboard revenue growth was 9.4%. Adjusted OIBDA for the segment increased by over $13 million, or 10% year-over-year. Within the segment, digital billboard revenue grew 17.6% (21% excluding the LA contract exit), while static and other billboard revenue grew 3.8% (4.3% excluding the exit). Billboard segment contributed 62.3% of total consolidated revenue (calculated from reported growth rates). 2. Transit Segment: Revenue grew a robust 32% year-over-year, led by 48% growth at the New York MTA franchise. Within the segment, digital transit revenue grew nearly 36% to $68 million, while static transit revenue grew over 29%. Transit expenses rose just 8% ($8 million) year-over-year, driving a $26 million increase in adjusted OIBDA to $33 million for the quarter. Transit segment contributed 37.7% of total consolidated revenue. 3. Combined Digital: Total digital revenue across both segments grew over 23% year-over-year (26% excluding the LA contract exit), and represented 37% of total consolidated revenue, up from 34% in the year-ago quarter. Programmatic and digital direct automated sales grew nearly 50%, representing 20% of total digital revenue, up from 17% a year prior. 4. Consolidated: Total consolidated revenue grew 14% year-over-year. Total consolidated adjusted OIBDA rose 29% to $160 million, and AFFO grew 45% to $121 million. Q2 2026 capital expenditures totaled $17 million, with $6 million allocated to maintenance spend.

Risks & headwinds

The call did not include explicit discussion of new material risks or operational failures beyond standard forward-looking statement disclosures that actual results may differ materially from guidance due to factors outlined in the company's SEC filings (including the 2025 10-K and upcoming Q2 2026 10-Q).

Analyst Q&A

• Q: What is the growth runway for programmatic out-of-home sales, and what is the strategic rationale for hiring a new chief data officer now?

  A: Out-of-home programmatic penetration is only 20% currently, compared to ~80% for online digital media in the U.S., so there is very substantial upside. Trading desks at large agencies and brands are structured to buy programmatically, so Outfront is investing to update its ad tech stack and strengthen relationships with key SSPs and DSPs to capture this growing revenue stream. The chief data officer was hired to advance measurement and attribution capabilities, as the industry adopts new standardized measurement. With his 30+ years of agency experience, he will help position Outfront as a core foundational component of omnichannel campaign planning for large enterprise brands.

• Q: Will new advertisers gained for the FIFA World Cup stay with Outfront post-tournament, and do you see signs of macro weakness in local commercial advertising?

  A: The World Cup was a key opportunity to demonstrate the value of out-of-home to new enterprise advertisers, which is a core long-term growth market for Outfront, and the sales team is actively working to retain these new accounts. AI brands have continued to drive strong demand across markets, and while the World Cup boosted Q2 commercial results, there is no significant evidence of broad macro weakness impacting local advertising.

• Q: What are the expected economic benefits of the New York Jets partnership, and is it focused on direct revenue or broader sponsor access?

  A: This 5-year exclusive out-of-home partnership is the first of its kind among major U.S. pro sports teams, bundling Outfront's in-market inventory into the Jets' overall sponsorship packages. The deal gives Outfront access to the broader pool of brand advertising budgets allocated to Jets sponsorships, and positions Outfront to capitalize on growing demand for bundled omnichannel out-of-home and experiential sports marketing opportunities.

• Q: What is the current M&A strategy and target focus for Outfront?

  A: With leverage at the low end of the target range and a strong liquidity position, Outfront will maintain its prior strategy of small tuck-in acquisitions of premium billboard inventory in existing markets, which generate both revenue and cost synergies, but will be more aggressive in pursuing opportunities. The firm will also consider entering attractive new DMAs that it does not currently serve, and will consider small additional technology enablement investments similar to the prior AdQuik stake, with core focus on expanding physical out-of-home inventory.