• Net Revenue: $115.3 million, a 0.2% increase year over year.
• Adjusted EBITDA: $25.5 million, a 6.3% decline year over year.
• Digital Revenue: 52% of total net revenue in Q3.
• Digital Advertising Growth: 5% increase year over year.
• Programmatic Advertising Growth: 10% increase year over year.
• Broadcast Advertising Revenue: Increased 0.3% year over year.
• Political Revenue: $3.7 million in Q3.
• Net Income: $11.3 million or $0.63 per diluted share.
• Cash Flow from Operations: $9.9 million in Q3.
• Cash on Hand: $22 million at the end of September.
• Net Leverage: 4.86 times as of September 30.
• Dividend: $0.1975 per share, equating to $0.79 annually.

• Warning! GuruFocus has detected 4 Warning Signs with TSQ.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Townsquare Media Inc (NYSE:TSQ) achieved sequential improvement in revenue growth rates across all three business segments.
• Digital revenue returned to growth, contributing to 52% of total net revenue in the third quarter.
• The company successfully repurchased $11 million of bonds below par and over $1 million of stock, while also paying a $3 million quarterly dividend.
• Townsquare Ignite was recognized as one of the best and brightest companies to work for in the nation for the third consecutive year.
• The company is exploring growth opportunities through a strategic partnership with SummitMedia, aiming to expand its digital programmatic advertising solutions.

Negative Points

• National broadcast advertising revenue experienced a significant decline, with expectations of a more than 20% drop in Q4.
• Political revenue fell short of initial expectations, impacting overall revenue projections.
• Townsquare Interactive's net revenue declined by 6% year over year, although it showed signs of recovery.
• The company's live events category saw a 37% decline in revenue year over year.
• Despite improvements, adjusted EBITDA declined by 6.3% year over year in the third quarter.

Q & A Highlights

Q: Bill, you indicated that national digital was strong, but national broadcast spot deteriorated. Do you think there's a shift in national to digital, and do you think national broadcast spot will ever come back? A: National digital was down over $1 million in Q3, but we expect it to plateau in Q4. National broadcast was performing better in Q2 but is pacing over 20% down in Q4. There is some shift from broadcast to digital, driven by election uncertainty. We expect broadcast to remain a cash cow business with a slow decline, not returning to growth.

Q: On the core broadcasting side ex-political, there was a sequential decline. Can you add some color on what you're seeing and the tone of local advertising? A: Ex-political, Q3 broadcast was down about 5%. We expect softness to continue due to national decline and election clutter. With the election behind us, we anticipate improvement in local advertising through the rest of the year and into next year.

Q: Regarding the SummitMedia partnership, were there any contributions in Q3, and when do you anticipate meaningful revenue contributions? Are there costs associated with this agreement, and what is the margin profile for the white label business? A: No material revenue in Q3, with a few hundred thousand dollars expected in Q4. Costs are mainly personnel-related. The margin profile for the media partnership division is slightly compressed compared to our overall digital advertising margins, estimated in the high teens.

Q: How does the recent shift in interest rates affect your approach to debt refinancing? A: We plan to do a variable instrument, likely a bank loan, in early 2025. Interest rates are expected to come down, benefiting our refinancing. As leverage decreases, we hope to reprice our spread in the future.

Q: On the Digital Advertising side, what specific ad formats or inventory are helping support growth? A: Growth is driven by social and video advertising improvements. Our social footprint and video advertising through platforms like YouTube are increasing. We are also seeing a recovery in core display ads on websites and mobile apps.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.