On May 2, 2024, Gannett Co Inc (GCI, Financial) released its financial results for the first quarter ended March 31, 2024, through an 8-K filing. The company, a major player in the digital newspaper industry, reported a net loss of $84.8 million, which included a significant impairment charge. This performance fell short of analyst expectations, with a reported loss per share of $0.60 compared to the estimated -$0.36.
Company Profile
Gannett Co Inc operates primarily through its three segments: Domestic Gannett Media, Newsquest, and Digital Marketing Solutions. The company's extensive portfolio includes more than 250 daily newspapers, such as USA TODAY, and numerous digital marketing services companies. Gannett also engages in over 350 annual themed events and maintains a strong presence in the U.K. through Newsquest.
Financial Performance and Challenges
The first quarter saw Gannett grappling with a 5.0% decline in total revenues year-over-year, totaling $635.8 million, which nonetheless marked an improvement over previous quarters. The digital sector was a highlight, with digital revenues growing by 8.1% year-over-year, now representing 42.1% of total revenues. Despite these gains, the company faced a substantial net loss, exacerbated by a $46 million impairment charge related to exiting a leased facility in McLean, Virginia.
Adjusted EBITDA for the quarter stood at $57.6 million, down 8.4% from the previous year, indicating ongoing operational challenges. However, the company managed to generate $22.5 million in cash from operating activities, an improvement from the prior year, and a modest free cash flow of $9.5 million.
Strategic Highlights and Digital Growth
CEO Michael Reed emphasized the strategic expansion in monetization efforts, particularly in digital arenas. Digital-only subscription revenues and average revenue per user saw significant increases of 21.3% and 22.4%, respectively. Gannett's focus on digital transformation is evident with digital revenues expected to constitute over 50% of total revenues by 2025.
The company's digital marketing solutions segment also showed positive momentum, with core platform revenues increasing by 4.2%. This segment's performance is crucial as Gannett continues to diversify its revenue streams beyond traditional print media.
Outlook and Future Projections
Gannett reiterated its full-year 2024 outlook, projecting a 10% growth in total digital revenues and anticipating overall revenue declines in the low to mid-single digits. For the mid-term, the company remains optimistic, expecting revenue growth in the low single digits and a significant improvement in net income by 2026.
Overall, Gannett's first quarter of 2024 painted a mixed financial picture. While digital growth presents a promising frontier, the substantial net loss and ongoing revenue declines pose challenges that the company must navigate. Investors and stakeholders will likely watch closely to see if Gannett's strategic focus on digital expansion and operational adjustments can stabilize its financial trajectory and lead to sustainable growth.
For detailed financial figures and further information, please refer to Gannett's official 8-K filing.
Explore the complete 8-K earnings release (here) from Gannett Co Inc for further details.