iHeartMedia, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Ad Market Monitoring: Seeing generally stable ad spend but monitoring closely due to lack of visibility. Ability to take quick and decisive action on cost and growth opportunities, leveraging technologies like programmatic and AI to reduce operating expenses.
• Financial Results: First quarter adjusted EBITDA was $105 million, flat to prior year. Consolidated revenue up 1% versus prior year (up 1.8% excluding political). Modernization program on track to generate $150 million net savings in 2025, with $27 million benefit in Q1.
• Segment Details: Digital Audio Group showing strong performance with podcast growth; Multiplatform Group seeing Premiere Networks revenue growth and aiming to increase market share; Audio & Media Services Group facing declines, mostly from Katz Television.

Segment Performance

• Digital Audio Group: First quarter revenue was $277 million, up 16% versus prior year. Adjusted EBITDA was $87 million, up 27.8% versus prior year, with margins at 31.4% (compared to 28.5% prior year). Podcast revenue grew 28% versus prior year. Non-podcast digital revenues grew 8.7% versus prior year.
• Multiplatform Group: First quarter revenue was $473 million, down 4.2% versus prior year. Excluding political, revenue was down 3.4%. Adjusted EBITDA was $70 million, down 9.3% versus prior year. Premiere Broadcast Networks revenue returned to growth in Q1, up 2.1% versus prior year. iHeart grew to 40% of the advertising revenue in markets measured by Miller-Kaplan.
• Audio & Media Services Group: First quarter revenue was $59 million, down 14.2% year-over-year. Adjusted EBITDA was $16 million, down 33.3% versus prior year. Most decline driven by Katz Television. Excluding political, revenue was down 11.8%.

Guidance

• Second Quarter: Expected adjusted EBITDA in range of $140 million to $160 million (prior year $150 million). Consolidated revenue expected down low single digits versus prior year. April pacing down 2% versus prior year (down 1.4% excluding political).
• Segment Guidance for Q2: Digital Audio Group revenue expected up low single digits (podcasting revenue growth in low 20s). Multiplatform Group revenue expected down mid to high-single digits. Audio & Media Services Group revenue expected down ~5% due to political impact. Full year guidance needs macro improvement to avoid negative ad market impact.

Risks

• Uncertain Ad Market: Lack of visibility in ad spend creates uncertainty. Macro volatility poses potential negative impact on the advertising marketplace for audio.

Question and Answer

Q: Stephen Laszczyk asked about the ad market, including tariff announcements and ad partner conversations.

A: Bob Pittman noted Premiere Networks was up over 2% in Q1, indicating bigger advertisers were hanging in there, and improving news helps. Rich Bressler mentioned pacing is a point in time.

Q: Stephen Laszczyk asked about terrestrial radio industry market share.

A: Bob Pittman stated broadcast radio has more listeners than 10 years ago, focusing on monetization transformation with ad tech stack and programmatics, expecting to gain market share.

Q: Sebastiano Petti asked about podcasting growth and radio industry regulation.

A: Bob Pittman said podcasting has a large and growing audience, diversified across categories, and YouTube's impact on podcasting is separate. Rich Bressler talked about podcasting's natural advantage with broadcast radio promotion. On regulation, no impact on operating strategy.

Q: Aaron Watts asked about Q1 cost savings cadence and revenue slowdown cost rationalization.

A: Rich Bressler said $27M in Q1 isn't run rate, with expected $40M per quarter in remaining quarters. There are additional cost rationalization opportunities by leveraging AI and feeding growth opportunities.

Q: Aaron Watts asked about Nielsen ratings methodology.

A: Bob Pittman said Nielsen is trying to capture all listening, which is important for ad measurement and media mix models.

Q: Patrick Sholl asked about programmatic adoption and podcast growth.

A: Bob Pittman said programmatic progress with digital inventory, working on broadcast inventory. Rich Bressler mentioned adding broadcast inventory to platforms like DB360 and Yahoo. Podcast growth is from both volume and rates.