Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Townsquare Media Inc (TSQ, Financial) achieved sequential improvement in net revenue, with a decline of only 2.5% year-over-year, meeting their guidance.
- Digital advertising net revenue grew by 9% year-over-year, driven by strong programmatic advertising performance.
- Townsquare Interactive returned to net subscriber growth and sequential revenue growth, adding approximately 275 net subscribers in Q2.
- The company repurchased $20 million of bonds at a discount and received a bond rating upgrade from S&P Global.
- Townsquare Media Inc (TSQ) maintained strong cash flow generation, allowing for continued investment in digital growth and shareholder returns through dividends and share buybacks.
Negative Points
- National digital advertising revenue declined, offsetting some of the gains in programmatic digital advertising.
- Townsquare Interactive's net revenue declined by 13% year-over-year, despite sequential improvements.
- The company recorded non-cash impairment charges of $32.6 million, primarily related to FCC licenses.
- Second quarter adjusted EBITDA declined by 8.3% year-over-year, reflecting ongoing challenges.
- Live events revenue declined by 11% year-over-year, generating only a small profit.
Q & A Highlights
Q: Can you provide insights into the advertising environment as you head into the third quarter?
A: Bill Wilson, CEO: Our local and regional clients are feeling positive despite economic uncertainties. The recent jobs report and potential interest rate cuts are seen as tailwinds. Inflation and wage pressures have eased, making it easier for small businesses to find workers. We expect Q3 broadcast advertising to perform better than Q2, and digital advertising to grow by approximately 4%, driven by strong programmatic advertising.
Q: Can you elaborate on your new SaaS-based business service offering and its impact on Townsquare Interactive?
A: Bill Wilson, CEO: Our new SaaS-based business management platform includes CRM, email and text marketing, appointment scheduling, and payment services. It allows us to target clients who already have a strong web presence. This offering has led to higher revenue per subscriber and consistent margins. We expect continued subscriber growth and month-over-month revenue growth.
Q: Have you moved past the start-up issues with your West Coast offices, and what are the trends in subscriber additions and losses?
A: Bill Wilson, CEO: Yes, the West Coast office in Phoenix is performing well, attracting great talent and serving clients effectively. We lost smaller clients struggling with high interest rates and inflation but are now gaining larger clients and entering new verticals with our business management platform.
Q: How do you plan to offer white-label options without cannibalizing your existing efforts?
A: Bill Wilson, CEO: We are partnering with other broadcasters and local agencies to white-label our digital advertising solutions. We will share client information to avoid overlap. This strategy allows us to accelerate growth without significant capital investment.
Q: What are your expectations for the core radio business over the next five years?
A: Bill Wilson, CEO: We expect our broadcast business to remain stable, reaching 50% of the adult population in our markets. We will continue to invest in local content and DJs, supported by our digital business. While we see broadcast as a slightly declining asset, it remains a vital cash cow and a key part of our strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
