Cumulus Media, Inc. Q1 FY2024 earnings call

• Refinanced capital structure to secure a 5-year maturity with favorable terms, extending maturities to 2029, reducing debt by ~$33 million, securing attractive interest rates, maintaining covenant-like terms, and increasing ABL facility availability by 25%. - In Q1, digital marketing services revenue was up 25% due to expansion of digital sales force and ramp-up of Cumulus Boost. - Digital results reflect a differentiated go-to-market strategy with a versatile sales team. - National advertising recovery is choppy with certain categories affected by the interest rate environment; local broadcast radio recovery is more gradual. - Fixed cost reductions of ~$4 million in Q1, with further opportunities in areas like outside contractors, renegotiating fixed-price contracts, people savings, and sports production cost realignment.

Total company revenue in Q1 was down 2.7%, with EBITDA at $8.4 million. Digital showed strong growth, increasing 7% year-over-year. Digital marketing services revenue was the lead growth driver, up 25% in the quarter. Podcasting and streaming also grew in the quarter, up low single digits. For broadcast, national spot and network businesses were down mid-single digits in Q1; local spot revenue improved from Q4 2023 but was still down; political revenue for the quarter was $2.2 million, down 55% from 2020. Digital marketing services contributed 25% growth, and digital overall made up a significant portion of the company's revenue with its growth.

• Total company revenue is pacing down low single digits for Q2. - Expect robust political revenue in late third quarter and fourth quarter due to a heavily contested general election and numerous down-ballot races across the footprint.

• Uncertain macro environment poses an obstacle to advertisers' spending patterns. - Choppy recovery in national advertising as certain key categories like mortgage, banking, and home improvement are affected by the interest rate environment.

Q: Historically, thoughts on the breakout of digital businesses and pacing of digital in Q2?

A: Our businesses are still roughly 1/3, 1/3, 1/3, varying quarter-to-quarter. This quarter, digital is pacing in the mid-single digits, with DMS extremely strong and podcasting pacing up nicely.

Q: Color on the $4 million fixed cost reduction and prospects for additional fixed cost reductions?

A: Most fixed cost reductions in Q1 were in areas like outside contractors, renegotiating fixed-price contracts, and people savings. There's potential in sports production cost realignment, an incremental approach with no single large item across the footprint.

Q: Client additions for digital marketing services and local vs national in podcasting?

A: Client additions for digital marketing services are a combination of new advertisers and some pulling from other agencies. Podcasting has both local and national efforts, with growth coming from listenership growth, including 12 local podcasts charting on Apple Podcasts.

Q: Pacing guidance for broadcast in Q2?

A: Broadcast pacing is down in mid-single digits. Local spot is seeing business booking late in the month, and national is impacted by a light sports quarter in Q2; too early to tell final trends.