Townsquare Media, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Digital First Strategy: Townsquare has transformed into a Digital First Local Media Company. Digital revenue in Q1 2025 was 57% of total net revenue, and digital profit was 62% of total segment profit.
• Ignite Details: Digital advertising net revenue grew high-single digits in Q1, driven by programmatic business. The media partnership model launched in 2024 has 5 local media partners signed so far, with plans to add more.
• Townsquare Interactive Updates: Returned to year-over-year segment profit growth in Q1, with revenue growing +4% year-over-year. Changes in sales team and compensation structure are aimed at long-term profitable growth.
• Broadcast Performance: Broadcast advertising declined as expected in Q1, but Townsquare outperformed the industry in broadcast market share. Digital product profit margins are equivalent to traditional broadcast margins.

Segment Performance

• Digital Advertising (Ignite): Q1 net revenue grew +8% year-over-year. In Q1 2025, digital revenue accounted for 57% of total net revenue. Segment profit increased +16% year-over-year with a 25% profit margin.
• Subscription-based Digital Marketing Solutions (Townsquare Interactive): Q1 revenue grew +4% year-over-year. Segment profit increased 22% year-over-year, with a 32% profit margin in Q1.
• Broadcast Advertising: Excluding political, broadcast advertising net revenue declined 8% year-over-year in Q1. Broadcast segment profit margins dipped to approximately 20% in Q1 due to revenue declines and seasonality.

Guidance

• Full-year 2025: Reaffirmed net revenue guidance of $435 million to $455 million and adjusted EBITDA guidance of $90 million to $98 million, accounting for a $10-11 million loss of political revenue.
• Q2 2025: Expected net revenue between $114 million and $116 million. Digital advertising expected to grow mid-single digits. Townsquare Interactive revenue to grow modestly, with strong profit growth. Broadcast revenue to decline in line with Q1. Adjusted EBITDA expected between $25 million and $26 million.

Risks

• Tariff and Macro Uncertainty: Impact on advertising spending due to tariff and trade uncertainties, which affected revenue in April but improved in May and June.
• Competition: Competitive landscape in digital advertising markets outside top 50 cities, though Townsquare's scale and full-service digital agency model differentiate it.

Question and Answer

Q: Competitive landscape in Ignite's markets outside top 50 and revenue from non-radio markets A: Townsquare's scale, full-service digital agency model, and insights differentiate it. Media partnerships contribute a small portion to Ignite revenue, with ~$1 million in Q1.

Q: Legacy broadcast clients and digital platform usage A: Large majority of broadcast advertisers use digital solutions; over 85% of broadcast buyers use some digital.

Q: FCC deregulation and broadcast ownership A: Deregulation is welcomed, with opportunities to grow organically or through acquisitions, as demonstrated by past acquisitions.

Q: Growth of media partnership area A: Expected to reach $50 million run rate revenue in 3-4 years, with significant opportunity in hundreds of markets outside top 50.

Q: Impact of tariff uncertainty on Townsquare Interactive A: Tariff uncertainty caused a short-term pause in revenue, but May and June have shown improvement, with Interactive resuming pre-Liberation Day levels.