iHeartMedia, Inc. Q2 FY2025 earnings call

• Second quarter performance was solid and slightly ahead of initial expectations. Generated adjusted EBITDA of $156 million at upper end of guidance range. Consolidated revenue up 0.5% compared to prior year quarter, excluding political impact up 1.5%.
• Digital Audio Group's podcast revenue grew 28.5% compared to prior year, with 50% of podcasting revenue generated by local sales force in Q2, up from 14% in Q2 2020.
• Multiplatform Group's top 50 advertisers up 4% year-over-year and 4 largest advertising agency groups up 7% year-over-year. Making progress on ad tech platform, with Lisa Coffey joining as Chief Business Officer to drive efforts.
• Still on track to generate $150 million net savings in 2025, with Q2 results including benefit of $40 million net savings.

Digital Audio Group

• Second quarter revenue: $324 million, up 13.4% versus prior year, slightly above guidance of up low double digits.
• Adjusted EBITDA: $108 million, up 17.1% versus prior year.
• Adjusted EBITDA margins: 33.2% versus 32.2% in prior year. Podcast revenue grew 28.5% compared to prior year, above guidance of up low 20s. Non-podcast digital revenue grew 4.7% compared to prior year.

Multiplatform Group

• Second quarter revenue: $545 million, down 5.4% versus prior year, at upper end of guidance range of down mid- to high single digits. Excluding political impact, revenue down 4.8%.
• Adjusted EBITDA: $96 million, down 7.6% versus prior year. Adjusted EBITDA margins: 17.7% versus 18.1% in prior year.

Audio & Media Services Group

• Second quarter revenue: $68 million, down 3.3% year-over-year. Adjusted EBITDA: $24 million, flat to prior year. Excluding political impact, revenue up 3.8%

• Third quarter adjusted EBITDA expected in range of $180 million to $220 million. Consolidated Q3 2025 revenue expected to be down low single digits compared to prior year and up low single digits excluding political impact. July pacing down 1.8% compared to prior year and down 0.3% excluding political impact.
• Digital Audio Group's revenue expected to be up high single digits in Q3 with podcasting revenue expected to grow in low 20s. Multiplatform Group's revenue expected to be down mid-single digits and approximately flat excluding political impact. Audio & Media Services Group's revenue expected to be down approximately 30% and down mid-single digits excluding political impact.
• Full year 2025 guidance still needs positive movement in macro and easing of advertising market uncertainty as it didn't contemplate current macro volatility.

• Macro environment uncertainty which may impact the advertising market

Q: Just maybe a quick follow-up on the guidance that you provided. You mentioned the categories of growth in Q2. I was just wondering if there was -- if that was kind of consistent with what you're seeing in Q3 or some other categories picking up.

A: Pat, it's Rich. Thank you for the question. No, we really haven't talked about going forward in terms of categories out there. But I think one of the things we did highlight on this call for the first time is how our top 50 advertisers are doing individually and the top advertising agency relationships we have, holding companies, how they're doing for both the MPG Group and the total company and so I would -- less so categories. But I would look to that as a pretty good indication of the future that, that's kind of a leading indicator that we're comfortable with the guidance we provided and reinforced by what we see for our big advertisers and big agencies. But I haven't given anything specific on the categories.

Q: And then just on the Digital Audio Group side, could you just maybe talk about the different -- any differences in growth trends between digital streaming and podcasting. And if there's any differential within audience or data around that, that you could -- maybe just talk about the different growth rates there and what advertisers are looking for.

A: We have not provided that level of granularity, but you can see from the numbers that podcasting is just roaring. And I think we're happy with the rest of it. But I think podcasting in terms of consumer acceptance and advertiser acceptance is -- that momentum is continuing.

Q: Just a few questions. First, on the EBITDA guide with the range being $40 million. I mean if revenues are going to be down low single digits, you're sort of very specific on that number, but there's still a pretty big EBITDA range. So is there sort of some uncertainty about things on the expense side?

A: No. No, we're just looking. And again, for context, we widened the range a little bit here. But remember, when you look at a couple of things are coming down to EBITDA and first and foremost, you look at revenue mix, too, as we talk about where the revenue in terms of coming in, whether it's coming from Multiplatform or the products in Multiplatform or the Digital Audio Group and the products within the Digital Audio Group. So that's really all you're seeing in terms of that range out there.

Q: Just a couple more. On the EBITDA bridge chart, which is helpful on Slide 12, just 2 questions. One is this net cost savings bar of $40 million, should we expect that number to be similar or higher in the third quarter?

A: You should expect it to be the same. And I just think for a little bit of context or some context, I believe we mentioned this on last quarter's call, we said just as you think about it, we had, I think, $27 million in Q1, our expense savings. And then we said at that point, think about the remaining 3 quarters to be equal at $40 million a quarter. And I think as Bob stated in his opening remarks and I stated, we are on track 100% to achieve the $150 million net cost savings. And I think this quarter in Q2 on the implementation following up on what we did in Q1 is tangible evidence that we're on track to achieve the numbers.

Q: And the last bar before the $156 million, this negative $10 million, like can you maybe just say what that was and if that's going to repeat?

A: It's just -- it's higher benefits. And again, I think like most companies, as we go through a year and we close out a quarter and we see what the -- actually is happening with our employees, we just true up. We've kind of been around that number, I think, for most quarters. So not saying what the numbers are going to be in the future, but it's something that's not material. And -- but we don't really know if we trued up, but it's not going to be outside that zone very much based on at least all past experience we have.

Q: The announcement today about your hiring Lisa is definitely encouraging. Have you -- is there any more to report on programmatic? Are you on any more demand-side platforms? And if I missed the announcement, I apologize.

A: Well, we've got -- and I'm sorry, I don't have right in front of me all the ones we've announced, but we've made great progress in getting on. And I think what Lisa is coming aboard, who's an absolute expert on this, as you can tell from her credentials, is -- although we've been building the technology platform, Lisa is coming in to really bring the advertisers to the platform and be responsible for generating the money on the platform and sort of the last piece of the puzzle. And obviously, her needs will also guide the final bit of development on the platform as well.