LEE ENTERPRISES, Inc Q1 FY2025 earnings call

• Team has made progress in digital transformation while serving communities with local journalism. • Leveraging AI to enhance digital transformation, with Les Alder Linde sharing AI-driven initiatives. • Digital subscription revenue grew 46% annually over last three years, outpacing industry peers; AMP by digital agency revenue grew 33% annually over past three years. • For readers, developed next-generation AI personalization system with partnerships, testing hyper-personalized consumer use experience. • For advertisers, launched Smart Sites AI-powered website platform and AI Boost program for content creation, with plans to expand to podcast and video. • Identified $40 million in annual cost reduction to be executed by end of second quarter; closed over $5 million in asset sales in first quarter, with $25 million of non-core assets to monetize; credit agreement with Berkshire Hathaway has favorable terms.

Trailing twelve-month total digital revenue was $302 million, including $102 million with an Amped by Digital agency. First quarter digital revenue grew 5% year over year. Digital subscription revenue grew 40% year over year. Digital agency revenue AMP grew 33% annually over the past three years, and digital subscription revenue grew 46% annually over the last three years, nearly doubling the nearest industry peer. Digital revenue contribution details: trailing twelve-month digital revenue is $302M, with Amped by Digital agency at $102M; first quarter digital revenue up 5%, led by 40% growth in digital subscription revenue.

• Expect total digital revenue growth in 2025 in the range of 7% to 10% and adjusted EBITDA to grow in the low single digits. • Lee's three-pillar growth strategy aims for total digital revenue of more than $450 million by 2028; first quarter had annualized digital revenue of $302 million, showing progress towards the target. • Continued growth in digital subscription revenue, Amplify Digital Agency revenue, and new AI revenue opportunities will drive long-term outlook.

• Forward-looking statements are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially. • Such factors are described in the news release and SEC filings.

Q: Could you talk about plans to monetize your AI library and potential launches in the second fiscal quarter, and the value proposition to advertising customers? Also, provide more info on cost initiatives and confidence in digital revenue growth and EBITDA, and number of digital subscribers.

A: Les Alder Linde mentioned evaluating monetization of content library, with focus on AI Boost program where advertisers benefit from relationships with Perplexity. Tim Millage stated confidence in FY2025 guidance due to core digital business scale growth, AI initiatives acceleration, and $40 million cost reduction. Digital subscription units ended the quarter at 774,000.