USA TODAY Co., Inc. Q2 FY2024 earnings call

Mike Reed noted strong second quarter with improved same-store revenue trends, driven by digital revenue growth. Adjusted EBITDA grew ~5% y-o-y. Kristin Roberts highlighted audience growth with 185M average monthly unique visitors, USA TODAY NETWORK being top news info provider in April, and video content initiatives. Chris Cho discussed DMS business with year-over-year revenue growth, highest core platform revenue, ARPU increase, and launch of DASH AI-powered CRM solution. Partnership revenue grew over 100% y-o-y in Q2.

In Q2, total operating revenues were $639.8 million, down 4.8% y-o-y or 4.6% on a same-store basis. Total digital revenues were $278.4 million, up 6.2% and accounted for 43.5% of total revenues. Domestic Gannett Media segment adjusted EBITDA was $52.9 million, up 19% q-o-q with 10.8% margin. Newsquest segment adjusted EBITDA was $14.1 million, up 13.6% y-o-y with 23.1% margin. DMS business had core platform revenue of $122.8 million, up 1% y-o-y, adjusted EBITDA $11.8 million with 9.5% margin, ~14,700 customers, core platform ARPU ~$2,800, up 5.1% y-o-y.

Expect continued improvement in second half of 2024. Adjusted EBITDA growth, free cash flow generation, ongoing same-store revenue trend improvement, growing digital revenues, and further deleveraging are expected. Confident in hitting full-year commitments with strong pipelines in digital advertising and DMS, and strategic initiatives in content and audience engagement.

Discussed risks related to forward-looking statements, where actual results may differ from expectations. Also, risks associated with the traditional media industry's secular declines, potential impact of changes in Google's algorithms and AI search engine developments on traffic and revenue, and ensuring fair compensation for content in AI partnerships.

Q: Curious if audience growth is sustainable and how to leverage massive audience.

A: Kristen Roberts said large audience allows focus on engagement for diversified digital revenue, using segmented products for specific audience groups.

Q: Thoughts on debt repayment and sales of non-strategic assets in second half.

A: Doug Horne said debt repayment a top priority, expect acceleration in second half with active pipeline of asset sales.

Q: Confidence in further digital subscriber and revenue growth.

A: Michael Reed said focus on ARPU (still below market) and volume (low penetration rates), leveraging data and AI for personalization.

Q: Revenue and EBITDA projections for balance of 2024.

A: Michael Reed said right on track, six consecutive quarters of revenue trend improvement, EBITDA feeling good, leverage declining.

Q: Thoughts on AI search engines and leveraging content.

A: Chris Cho said focused on proper compensation for content, Michael Reed said content valuable as search engines emerge, opportunity for licensing revenue.

Q: Color on DMS business acceleration and AI products.

A: Chris Cho said proactive in improving churn, focusing on selling comprehensive product portfolio, DASH AI-powered product with more add-on features in pipeline.

Q: Impact of Google AI overviews on search traffic.

A: Michael Reed said not seeing real impact yet, audience numbers continuing to grow.

Q: Long-term benefits vs risks of AI content deals.

A: Michael Reed said want to be part of solution, anxious to engage, need fair value for content, optimistic to strike mutually beneficial deals.