Beasley Broadcast Group, Inc. Q2 FY2025 earnings call

• Signed agreements to sell WBCN-AM, WJPT-FM, WWCN-FM in Fort Myers for $9 million and WRXK-FM, WXKB-FM in Fort Myers for $9 million, and previously announced sale of WPBB-FM in Tampa for $8 million, with combined gross proceeds of $26 million. • Digital business has strong revenue growth and expanding margins but core audio segment underperformed. • Begun transformation of sales organization to pivot from legacy selling models to digitally native local-first approach. • Implemented approximately $10 million in annualized expense reductions in first half of year, totaling roughly $30 million over past 12 months. • Preparing to launch Display Plus, self-serve advertising platform, and has new video platform and expanded market newsletters. • Brands delivered impressive growth in ratings, with PPM market station ratings up 14% year-over-year in key demo, total cume up 7% year-over-year, and social media audience up over 8% compared to last year.

Digital revenue grew by 1.3% or 8.1% on a same-station basis in Q2 and accounted for 25% of total revenue. The digital segment operating margin improved 900 basis points quarter-over-quarter from 17.8% to 26.8%. The core audio segment significantly underperformed, contributing to a larger-than-expected revenue shortfall.

• Third quarter total revenue is pacing down high single digits excluding political; including political, similar to second quarter end. • Local direct is pacing up approximately 3%, digital is pacing up approximately 18%. • Q3 digital is expected to account for between 25% and 30% of total revenue mix. • Plan to use net proceeds from asset sales to reduce debt and strengthen capital structure.

• Continued weakness in agency business, with national agency revenue down 12.1% year-over-year and local agency down 24.7% year-over-year in Q2. • Traditional audio being deprioritized in media mixes due to underrepresentation in digital data sets. • Sales organization not yet fully evolved to offset losses through direct digitally led selling, and pivot to new selling model takes time.

Q: Can you update us on where the cost savings plan stand? How much has hit the numbers and how much more will benefit 2025? Given the current revenue challenges, do you expect to do more cuts in 2026?

A: As Caroline noted, since the second quarter of last year, we have taken cost actions that will take out approximately $30 million in annualized total costs. I would expect our 2025 expenses to land kind of $20 million to below $20 million less for the full year of 2025, and that sort of includes the sort of annualized portion of the cost cuts that we did in 2024 as well as the cost cuts that we've done year-to-date. And in particular, we're focused on as we renew key vendor contracts for next year, sort of being prudent in how we do that and sort of rationalizing what services we really require. So I think you'll continue to see that the cost structure be further optimized as we head forward here.

Q: How are CPMs trending? Are peers being competitive on pricing given the challenged environment?

A: Digital CPMs are holding in the current environment, and we see this with the competition as well. Our effective CPMs on digital continue to increase as we are selling more direct O&O. Then as far as traditional over-the-air CPMs, we are seeing those trending down primarily due to the fact that agency business is trending down double digits. So pricing remains competitive in our market.

Q: Do you see the opportunity for more asset sales?

A: As we have consistently stated and as we demonstrated today, we're always open to asset sales or swaps if it makes sense for the company.