Cumulus Media, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Digital Focus: Heavily focused on digital businesses, with DMS showing a 30% increase in Q1, accelerating growth from Q4. Honed broadcast go-to-market tactics, increasing revenue and ratings share in large markets.
• Cost Efficiencies: Executed $7.5 million of additional annualized net fixed cost reductions, with total fixed cost reductions since 2019 amounting to $163 million.
• Asset Leveraging: Leveraged a massive megaphone reaching 92% of the country and 250 million listeners monthly, 400 locally embedded sales professionals, an audio-first multi-platform content engine, and an extensive premium audio content library.
• Broadcast Strategies: Capitalized on premium sports content like NFL and NCAA, expanding the Beyond Home market business, and emphasizing live and local programming.

Segment Performance

• Digital Businesses: Aggregate digital businesses grew 6% year-over-year, profitable from day one. Digital Marketing Services (DMS) was the fastest-growing business, up 30% in Q1, driven by 41% growth in total customers, 16% increase in average campaign order size, and improved customer retention. Podcasting: Excluding the negative comp from Daily Wire, it was up close to 40%, but including Daily Wire, it was down 13%. Streaming was up 4% during the quarter.
• Broadcast Business: Impacted by tariffs and government spending cuts, with pullbacks in automotive, retail, and CPG categories; insurance and financial categories were positive. Beyond Home market business was up 48% in Q1 following 45% growth in Q4.

Guidance

• Pacing is down approximately 10% or 5% excluding political, Daily Wire, and net of the Bongino impact.
• DMS is pacing up more than 35% in Q2.
• Full year CapEx is expected to be $22.5 million as per previous guidance.
• Anticipates DMS to grow from its current revenue run rate of nearly $70 million to over $100 million plus run rate by the end of next year.

Risks

• Macro environment challenges including sweeping tariffs, government spending cuts, supply chain concerns, inflation, worsening consumer sentiment, and pullback in advertising spending.
• Negative comps in Podcasting due to Dan Bongino's appointment as Deputy Director of the FBI.
• Weak general market demand impacting the network business.

Question and Answer

• Q: On the network side, programs, decline drivers, and month-by-month revenue cadence. A: Programs didn't significantly change in the first quarter. Decline in network was driven by general market weakness. Advertisers placed orders later in the quarter, and the second quarter network is expected to perform worse due to weak general market demand.
• Q: Thoughts on FCC deregulation and asset sales. A: Optimistic about FCC deregulation, waiting for the confirmation of the fifth FCC commissioner. On asset sales, there were small land sales in Q1, and there's cautious optimism about selling Nashville land, expecting $10 million to $15 million of proceeds from asset sales this year.