iHeartMedia, Inc. Q1 FY2026 earnings call

Overall Financial Results

• Consolidated Q1 2026 revenue increased 9.6% YoY to $884 million, in line with high single-digit growth guidance. Excluding political advertising, revenue grew 9.3% YoY.
• Adjusted EBITDA came in at $93 million, slightly below the ~$100 million guidance, primarily due to earlier-than-anticipated recognition of noncash marketing expenses and softer-than-expected March advertising revenue tied to macroeconomic uncertainty and the Middle East conflict.

New Cost Reduction & Cash Tax Updates

• Management announced a new cost reduction initiative that will deliver an additional $50 million in annualized savings, starting in H2 2026. This is on top of the $100 million in 2026 in-year savings previously announced.
• Due to recent changes to U.S. tax code, management expects effectively zero cash taxes for 2026 and the following two to three years (assuming current tax law remains in effect), preserving $150 million to $200 million in cash over the 2026-2028 period and materially improving free cash flow.

Segment-Specific Operational Highlights

• Digital Audio Group: Podcast revenue growth outperformed guidance, with 50% of podcast revenue generated by the company's local sales force. Podcast operations remain EBITDA-accretive, and iHeartMedia holds the number one podcast publisher and sales network position in the U.S., with broadcast radio assets providing a unique competitive advantage for podcast growth.
• Multiplatform Group: iHeart outperformed the overall broadcast radio industry by 5.8 percentage points in Q1 2026 per Miller Kaplan data. Four core drivers are targeted to return the segment to adjusted EBITDA growth in 2026: (1) rolling out broadcast radio inventory to major programmatic buying platforms including Amazon DSP, Yahoo DSP, and Google DV360 to access the growing digital programmatic TAM; (2) integrated cross-asset sales that bundle broadcast radio with digital and podcast inventory; (3) gaining additional share of the broadcast radio total addressable market; (4) leveraging the continued growth and resilience of broadcast radio audiences, which are larger today than 20 years ago.
• The company holds a highly diversified advertising base: no single category makes up more than 5% of total advertising revenue, and no individual advertiser accounts for more than 2% of total revenue. Top growing categories in Q1 were healthcare, financial services, computers/electronics/appliances, and political; declining categories were entertainment, beauty/fitness, government, and telco.

Balance Sheet Updates

• As of quarter end, net debt was ~$4.7 billion, total liquidity was $495 million, cash balance was $135 million, and the net debt-to-adjusted-EBITDA leverage ratio was 6.9x.
• In early May 2026, the company fully retired its outstanding 6 3/8 notes and related stub term loan facilities, repaying the remaining $51.2 million balance.

iHeartMedia operates three business segments, with consolidated Q1 2026 total revenue of $884 million (100% contribution):

1. Digital Audio Group (DAG): Q1 2026 revenue was $327 million, up 18% year-over-year (YoY), representing 37% of total consolidated revenue. Within DAG, podcast revenue hit $147 million (up 26.9% YoY) and Digital X Podcast revenue grew 11.6% YoY to $180 million. DAG adjusted EBITDA was $87 million, flat YoY, with an adjusted EBITDA margin of 26.5% (down from 31.4% YoY, consistent with seasonal Q1 margin trends).
2. Multiplatform Group: Q1 2026 revenue was $493 million, up 4.3% YoY (up 3.9% YoY excluding political advertising), representing 55.8% of total consolidated revenue. Adjusted EBITDA was $47 million, down from $70 million YoY.
3. Audio and Media Services Group: Q1 2026 revenue was $67 million, up 12.2% YoY (up 13% YoY excluding political advertising), representing 7.6% of total consolidated revenue. Adjusted EBITDA was $24 million, up 54.7% YoY.

• Full Year 2026 Guidance Reaffirmation: Management maintained full year 2026 adjusted EBITDA guidance of $800 million and free cash flow guidance of $200 million, which includes the benefits of both the original and newly announced cost savings initiatives.
• Second Quarter 2026 Guidance: Consolidated revenue is expected to grow low single digits YoY (April 2026 is currently pacing low single digit growth). Adjusted EBITDA is guided between $140 million and $160 million. Segment-level Q2 guidance: Digital Audio Group revenue up ~10% YoY (podcast revenue up low-20s, Digital X Podcast up low single digits); Multiplatform Group revenue flat YoY; Audio and Media Services Group revenue up low-teens YoY.
• Programmatic Revenue Guidance: Full year 2026 total programmatic revenue is expected to hit ~$200 million, representing 50% YoY growth, with broadcast programmatic growth expected to follow the same strong trajectory the company saw for podcast revenue.
• Full Year 2026 Inputs: Interest expense is expected to be ~$440 million; capital expenditures are projected at ~$90 million; cash restructuring expenses are ~$50 million. End-of-year net leverage ratio is expected to hit the mid-5x range, a more than 1 full turn improvement YoY.
• 2026 is expected to be a robust midterm election year for political advertising revenue, with 80% of political revenue set to be recognized in the second half of the year, consistent with historical trends.

• Macroeconomic uncertainty, driven by persistent inflation and consumer sentiment that remains at multi-year lows, has created softness in advertising demand, most visibly in March 2026, which contributed to adjusted EBITDA coming in below guidance for Q1.
• Geopolitical uncertainty tied to the ongoing conflict in the Middle East has been correlated with the softness in March advertising revenue, and ongoing uncertainty could continue to impact advertiser spending decisions through the rest of the year.
• Noncash marketing expenses tied to broadcast programmatic initiative development were recognized earlier than expected in Q1, leading to lower than projected quarterly EBITDA, though the full year impact is net zero.
• The company faces upcoming debt maturities starting in 2028 that require active deleveraging and capital management over the next several years.

Q: Is reaffirming full year guidance a balance between macro headwinds and the new incremental cost savings? How is 2026 political ad revenue shaping up relative to past cycles, and how much political revenue is included in the current guidance? / A: The assessment that guidance balances macro headwinds with incremental cost savings is accurate. Management expects 2026 to bring very large political ad spend, with the vast majority of revenue coming in Q3 and Q4 as is typical for election cycles. Q1 is the smallest quarter of the year for the company, so moving pieces from the quarter do not change the full year outlook, leading management to confirm the $800 million adjusted EBITDA guidance. (279 characters)

Q: The noncash marketing expense was heavier than expected in Q1 – is it set to moderate through the year, and what is the update on progress for selling broadcast inventory programmatically? / A: The heavier Q1 expense is only a timing shift, with no change to full year impacts, and the expense will taper in the second half of the year after continuing into Q2, all of which is already incorporated into guidance. The 50% programmatic revenue growth target remains on track, with Amazon DSP integration for broadcast inventory launching in H2, and the company expects programmatic growth to follow the same successful trajectory as podcast growth. Replacing historical cash marketing spend with noncash partnerships is also a long-term positive for cash flow. (417 characters)

Q: Do you see value in separating broadcast radio and digital/podcast assets, or do they remain better off combined? / A: Management has not pursued separation because the assets create significant complementary value. Broadcast radio provides unique cross-promotion that drives podcast and digital growth, as demonstrated by The Breakfast Club podcast earning 40% of all Netflix video podcast views in Q1 thanks to daily on-air promotion. Broadcast radio is also a strong free cash flow generator, with 75-80% of incremental revenue dropping to the bottom line, and the combined sales force can sell all asset types, with ~50% of podcast revenue now originating from local broadcast sales teams. (408 characters)

Q: What macro trends are you seeing in ad categories, and how is macro uncertainty baked into the full year guidance? / A: The ad market remains reasonably healthy despite macro pressures, with higher-income consumers and big advertisers less impacted by inflation than lower-income groups. Top growing categories are healthcare, financial services, and tech, while entertainment, beauty, and telco have seen declines. Political advertising will also take up meaningful inventory, which supports overall pricing and market health, and the inherent resilience of broadcast radio positions the company well for continued uncertainty. (324 characters)

Q: What are the long-term drivers of programmatic growth beyond the 2026 $200 million target? / A: The primary long-term growth driver is adding broadcast radio inventory to digital programmatic TAM, which fills a critical reach gap for digital audio ad buyers that cannot get sufficient reach from digital-only inventory, making DSP partners eager to add iHeart's broadcast inventory. Management expects broadcast programmatic to follow the same strong growth trajectory seen in podcasting, which grew from $50 million to $550 million in five years. Generative AI and deepening relationships with ad holding companies will also support continued long-term growth. (347 characters)