USA TODAY Co., Inc. Q1 FY2025 earnings call

Strategic Outlook: Reaffirmed full-year 2025 business outlook, optimistic about digital growth despite Q1 challenges. Achieved solid free cash flow generation and aggressive debt reduction of ~$75 million. Noted key leadership transitions, including Trisha Gosser as CFO and departure of Chris Cho from DMS. Audience and Monetization: Attracted 195 million average monthly unique visitors, growing over 4% year-over-year. Focus on Studio IX, a new sports vertical, local subscriptions, and AI-driven monetization. Made organizational changes to align consumer, content, and product teams. DMS Business: Executing action plan with new CRM integrations, search optimization, and focus on ideal customer profile. AI-powered solution Dash showing positive impact on customer retention.

Total operating revenues for Q1 were $571.6 million, a decrease of 10.1% year-over-year or 7.7% on a same-store basis. Digital revenues in Q1 were $250.4 million, down 6.4% year-over-year or 3.8% on a same-store basis, representing approximately 44% of total revenues. The domestic Gannett media segment had adjusted EBITDA of $33.2 million. Newsquest had adjusted EBITDA of $13.9 million. In the digital marketing solutions business, total core platform revenue was $108.2 million, with adjusted EBITDA totaling $8.5 million. There were approximately 13,400 core platform customers, and core platform ARPU reached approximately $2,700.

Reaffirmed full-year 2025 business outlook. Expects improved top-line trends for the balance of the year, led by re-acceleration in digital businesses. Anticipates higher adjusted EBITDA in Q2 with return to growth in the second half. Digital revenue performance expected to stabilize with potential for flat to modest growth in Q2 and more substantial growth later in the year. DMS revenue expected to be closer to flat in Q2 compared to Q1 decline, with improvement in budget retention and product development.

Impact of Google's manual actions on revenue growth pace. Uncertain economic backdrop affecting advertising trends. Legal and regulatory uncertainties related to ongoing lawsuits against Google, including potential outcomes and their impact on revenue.

Q: Impact of Google's DOJ case on business and opportunities A: The DOJ’s win sets the stage for a more fair ad marketplace, greater transparency, and higher revenue shares for publishers. It strengthens Gannett's case against Google and supports unlocking higher CPMs, stronger fill rates.

Q: DMS revenue growth expectations A: Expect marked improvement from Q1 to Q2, with budget retention uptick in Q1 positively impacting Q2 revenues, and benefits from SaaS product Dash and product development.

Q: Digital subscription revenue same-store trends A: Impacted by revenue reversals in the quarter, but underlying fundamentals strong. Initiatives like local engagement and lifecycle marketing to drive growth in digital-only subscriptions.

Q: Real estate asset sales A: Majority of real estate portfolio worked through, with a few minor sales expected, and substantial free cash flow generation reducing pressure to sell strategic assets.