Saga Communications, Inc. Q1 FY2026 earnings call

Saga has been doing training for digital transformation over 2.5 years. Digital revenue grew but didn't surpass traditional advertising decline. Continues to invest in digital infrastructure and people. Leaders emphasize training and execution speed. See opportunities in local digital advertising market. Green sprouts include digital - only blended revenue up over $1 million (103% increase year - over - year Q1 2025 vs Q1 2026), local e - commerce revenue up 23.2% in Q1 2026, April e - commerce registered record $347,000, 1 - 4月 e - commerce up 24% year - over - year.

For the quarter ended March 31, 2026, net revenue decreased $1.3 million or 5.6% to $22.9 million compared to $24.2 million last year. Digital revenue was up $900,000 or 25.2% to $4.4 million for the first quarter of 2026 compared to $3.5 million for the same period last year. Other income was down approximately $200,000 primarily due to reduction in rental income from tower sites sold. Station operating expenses were approximately flat, expected to increase 1.5% to 2.5% for the year for digital transformation infrastructure. Corporate, general and administrative expense expected to be approximately flat with last year at $12.3 million.

Second quarter is currently pacing down high single digits with digital up 10.2%. Expect to spend approximately $3.5 million on capital expenditures during 2026. Digital expenses increased $649,000 over same period due to addition of digital people, training, etc. Anticipate crossover period in third and early fourth quarters of 2026 where digital investments become accretive. Local e - commerce revenue continues to grow.

Speed of execution is the biggest risk over next 12 to 24 months. Concern about macro downdraft in traditional advertising sector and whether markets can effectively execute training content.

Q: Are there efficiency initiatives or automation efforts underway to protect margins?

A: Continue to bring digital offerings currently provided by third - party providers in - house to decrease cost and increase margins. Also deployed AI in on - air and online products and efforts.

Q: What are your expectations for political ad revenue this cycle compared to prior elections as well as how much of political revenue is already booked or visible at this stage?

A: Currently have $1.4 million in gross political revenue on our books. Expect to see pick up in late third quarter and early fourth quarter as we go into actual elections.

Q: What are the biggest risks to your business over the next 12 to 24 months?

A: Speed of execution and whether our markets can effectively execute what they've been taught with speed, authority and frequency.

Q: What KPIs should investors focus on to measure the progress we make in our transformation strategy?

A: If an investor, would focus on search growth, display growth and local direct growth as they are drivers of blended space growth.

Q: Do we anticipate further consolidation in the radio industry? And where does Saga fit?

A: First priority is to become stronger in the markets we already serve. Not focused on expanding just to get bigger. Watching FCC actions to see where Saga fits if there is further consolidation.