Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the Gannett Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Matthew Esposito. you. Thank

begin. may You

Matthew Esposito

Chairman morning, Chief to thank XXXX discuss today's President Kristin Marketing Mike Presenting Good Horne, Digital Officer; our Financial of Officer; Chief financial for and call on Officer; Reed, be will today Gannett's Gannett call Chief everyone, you. Executive you Doug Media and Roberts, joining results. and Content Thank Solutions. second Cho, quarter Chris

supplement have in the to website, will posted Gannett press an we earnings to If you navigate release. addition find you earlier our that

will on We detail the as it be quarter's this additional with call referencing it today provides on performance. you

begin, we please is call remind recorded. Before you that this let me being

this are risks and addition, expectations. discussed to with results today. may are involve respect or to based These to results statements may including those that In and during materially be events and upon events those statements differ future certain current and call actual cause be made uncertainties deemed forward-looking statements, from

you of encourage filings made earnings risk as Gannett's made or obligation statement in to to undertake statements as described we this the statements any factors publicly forward-looking We SEC. law, as cautionary well required correct supplement Except with in the no the the forward-looking read the by during update regarding call.

will adjusted margin and EBITDA information In during income free EBITDA, adjusted to the be Gannett. financial we discussing non-GAAP revenues, adjusted addition, flow, call including cash same-store attributable net

measures our reconciliations the find can most non-GAAP supplement. of the earnings GAAP comparable You in to U.S. measures

an duplicated, webcast and material cast purchase interest rebroadcasted Gannett you consent. may copyrighted on solicitation offer prior that written sell this or to nothing call of not Lastly, any of an I to The are would be without and to constitutes or reproduced in Gannett. audio remind like offer

turn to over Chairman CEO. Gannett's and would Mike call that, I to Reed, like the With

Mike Reed

everyone, for on and Good joining morning. our Thanks, call earnings thanks this to us Matt. morning QX

Gannett. for financial year-over-year. $XX.X EBITDA strong In to by reached quarter report results are of million a pleased and QX, We XX% improving grew adjusted

in We the to also generated flow increase significant a QX cash approximately compared year. reflecting of quarter, last of $XX million of free XXX%

to We role sequential play a believe trends. improvements initiatives strategic same-store in driving revenue our in continue crucial

total now for to which result, nearly revenue, returned XX% total digital account revenues, all-time representing high. in QX, our of growth a As an

Our cost controls strong, to work our efforts. remain and on continue we optimization diligently

generation EBITDA of growth, same-store sustained second in in and trends, the these to the continue result, a year. revenue revenue XXXX. are as of digital our adjusted half flow again items, year guidance raising expansion And are improvement All significant we free for of expected cash the fiscal

the importantly returned in specifically Importantly, in the quarter. on improvement in that, digital second being total revenue quarter. digital expect June growth revenues, quarter. the trend our And best on growth further we month to We with third

in of of this We end Xx our also reduced leverage which quarter, materially expect the to has below adjusted we combined to repaid million first by net billion $XX and with growth $X.XX well XXXX. the our debt fall figure EBITDA lien

structure customer-first data signify results what digital-led we are to making on from continue implement Consistent actions point a the progress We our our our and to notable over and our a quarters, necessary with few trajectory. our business reduce believe us we last technology. great by to heard to business turning strategy, in drive evolution cost you've and powered

foundation strong build on year. the we over past to the laid continue We

I'd results. With growth on evident that, in strengthening profitability, focus like focus balance our the persists Our digital second and positive results our quarter. in discuss to that and achieved sheet the is revenue

sequentially and quarter. year-over-year on growth over continued same-store a our digital-only grew they QX, increasing previous In showed X% XX% basis, subscription the revenues by

a with on and expectations subscription year-over-year, digital-only line ARPU. in acquisition were grew reflect which digital-only our QX strategy with profitability focus X% heightened the and volumes Our refined

As with to strategy. two a we and continued acquisition, content to years. in and believe We a on expect our ARPU ARPU pricing we strategically upside in focus customer have as QX, revenue result, regard continue growth smart we highest ongoing level achieved digital-only subscription

continue remains as we churn below expand Customer have in subscriptions and grow content opportunity our standards industry offerings. to and significant the to we believe digital-only future a we product

of by $XX come large digital continue properties. We come monetizing monthly our from from million of network those our $XXX our focus unique measured visitors, average on USA to million ComScore audience organic and XXX which of TODAY U.K. million as

monetization to a our addition user revenue. with of recurring we towards In subscriptions, base digital focused overall bias our the on hyper are

comes and fact, believe much subscriptions. digital is partnerships, to the monetization our content and product and digital offerings visitors our This expanding In platform from revenue advertisers, monetizing the on sports leveraging we capitalizing embracing opportunity bigger our verticals. affiliate all beyond through

audience delivering We to commitment believe coupled and revenue growth. overall these our all strategic and optimize to better our initiatives, relevant our will unwavering allow with improve of content digital us essential

cash us these as in these streams the expectations confidence also are sectors growth partnerships potential well and pacing from as arise for share that excited year. grow to other financial services the our ahead gambling Gannett. material first revenue opportunities relationships gambling.com into the great performance are partnerships to The We platforms in of flow in and with marketplace may and partnership Forbes gives that of

are of overall we additional the this over enhance believe home we will a our as major year. next broader in partnership reach platform. to audience, mentioned, enable to partnerships more such previously revenues expect actively come strategic expansion monetization sectors our and education, We As the increase and announcements us services exploring digital and

the strategy TODAY content the overall highly unique in is believe monetization network rooted USA and produces. valued We our

believe engine will forward, for to the Gannett continue we growth As Media. we content be move

joined as is already are We to that growth. our that bolstering Content drive so Kristin Roberts and excited Officer, Kristin our Chief team efforts leadership

already result audience. content our more compelling team her will audience, the is The improved creating and team in we seeing streams. of significantly our expansion amplify diligently expect strategy to our with expand in focused page diversified Kristin our executing Even resonates of on drive a on and this content significant we rapidly revenue and results. journalism are our are which and stages viewership views. strategy, initial that captivating

For [Audio June to implemented and that is our and to services. communities. local in businesses content, news Gap] new helping we various through local important tools, through Through consumers vital initiatives committed marketing our differentiated including customers and example, reach, are technologies cultivate our media our

increased We local results by of the are our encouraged efforts. early

much is to and engagement great there's knows lead to team do, our we will to believe revenues strengthen leadership a While which opportunity local increased brands, our there profitability.

we Jason optimization is of Officer recently his network Jason local Chief appointed with increased Media. Sales the connection believe Gannett, and ran Taylor In events domestic as media-owned efforts, with we ventures, our focus Gannett In largest TODAY business. role market USA which prior

of and will new the part oversee BXB and national teams and events at Company advertising Jason our and promotional media as business levels. embedding prioritize local both strategy we across sales events securing our as the

with track he Company. sales energy expertise further revenue management and growth, impact event media excited the local we the have combined record Jason's in positive his and about are will our efforts, on of will and propel

be critical importance As is we lives. we than to essential the nothing content, our in focus and strategy of local the their more on consumer and communities believe

Gannett are where banner the the from recently site. news where the Officer that experience strategy mind, Media. digital expansion. focus has of and MTS joined extensive MTS He on in digital CEO Baltimore Patel been media we to as he was welcome brings from With thrilled organizations, us of consumer news Chief growth Consumer his

results, is of record delivering a incredibly widely track With strong leader. collaborative as an recognized

confident are thrilled great a to Gannett impact. will are We have on and he team MTS make

We executive spent Digital are and two Solutions and us visionary who a Chris pleased over decades to business lead building product also Marketing Chris tech-enabled have Cho LocaliQ. is proven very scaling to businesses. join the

go-to-market Officer In Chris oversaw and recently, a Axiom, legal was product technology for in talent He Most this Chris platform portfolio. launching Chief product the platform new and instrumental Product recruiting technology capacity, features at strategy. expanding was resources.

the excited Gannett. forward and impact have expertise he are we will leadership Chris' to look and to We very bring to positive

revenue revenue X.X% improving digital aforementioned the this trend quarter, point. year QX growth is reaching growth X.X of $XXX.X by business. marketing solutions and strategy segment, platform million, A the our achieved history the of we key core from in digital growing component second highest year-over-year our our In of

both We generate strong to platform particularly are also ARPU in EBITDA we budget and continue all-time reach core and adjusted retention, see growth an margins. ARPU we achieved high. to significant Year-over-year, excited

customer strong also We customers count, in QX. sequential surpassing witnessed growth XX,XXX in

that and marketing digital a base product We products. an business remain profitability, manner premium technology-enabled compelling balances and offerings running solutions enhancing do-it-yourself our our while revenue a through with expanded customer also other target offerings growth appropriately to combined to experience, in committed

These of XX,XXX platform registered users daily X,XXX impressive complementary QX. XXX,XXX model are continues compares QX addition XXX,XXX to core in Our year. That registered in our to to growth with users drive surpassing in customers. last

also optimization We This are developing optimization technology actively our insights, facilitates to AI-powered leveraging advertising gold-based deliver known actions by results. technology as and cross-media exceptional XMO.

well year-over-year. We expected ability strong product deliver as line's are potential as its this excited about growth to

the performance significant of half the our progress on back enter the we and grow. continues year, To half facets quarter, with we over many And believe to second recap made the first continued of second solid of this see the We half concluded strong year. will as we momentum. our strategy XXXX of optimism

the of let I'd Doug since remarks it over they to and quarter, to turn Gannett moment joined and take about Kristen. last with start detail as like more share going quarterly Kristen call, I'm to I Before to Chris a a few to talk our

Kristen, you. I'll it kick to over

Kristin Roberts

business to unparalleled. of I talented in serving I've I Gannett to going Throughout opportunity are part communities lead organizations that content here innovative the have in nationwide. been this growth, way and extraordinary a my right. because creating work the you Gannett, believe truly At is joined driving career, with team potential models a

empowering about expanding we predictable journalism substantial serve repeatable company unlimited Gannett serves to The on growth. shareholders, that allows potential for benefits us communities. our purpose us that audience, and in delivers engaged our as organization. investments it and our better and part a believe Together, news is diversified, this make an revenue to exciting that offers growth while which us our local

in I've already seen here. remarkable brief progress time my

more to in June and alone, more make journalists we've we've As used come. increase hiring a in by with audience content funds repurposed notable in significant investments Mike new created to mentioned,

excited am growth down for still I'm Gannett our and stages, success. the I profitable this but My journalism. We're while in about to unwavering, path strengthening our in sustaining is potential and confident early leading passion achieve

Back to you, Mike.

Mike Reed

Cho, Thank IQ you, to business. is Chris leading who Chris? like I'd now now over to pass Kristen. it our And local

Chris Cho

and deeply and solutions products and continued innovative passion I and for success. Mike. look am impressed you, nurturing experience drive the our building by the tech-enabled excited leveraging join inspiring, our to offered. businesses I is Thank growth and Gannett to my forward to LocaliQ. to customers' collective businesses The truly talent I'm to contribute

long-term to operations. the In upcoming product ourselves and lay team for customers' strategies our freemium in business deeply work comprehensive develop quarters, new and we more out developing our plans as maximizing start that will entrench our offerings short-

to drive to collective commitment contribute develop our continually new the our ongoing needs. their I'm as over success. is to embark to to Together, journey obsess and success. journey I unwavering that will cater and Mike? eager we expertise requirements a ahead Our and and believe customers my exciting, their meeting forward their growth us evolving on ensure we will solutions creative

Mike Reed

as over the to and Thanks, it they not to to turn Chris. wait over want impacts see as have to couple MTS only well just are quarters we and how Jason to can't And over the years. make the coming say business, but Doug, our I here excited Kristin before

second Doug the And XXXX. around now, for I'll additional over to turn quarter it color of

Doug Horne

Thank and everyone. morning, you, good Mike,

are in As Mike solid progress the priorities. mentioned, against financial quarter, we and very our strong which performance the second with strategic pleased demonstrates results

half a operating revenue significant as total expect million, improvement of the of trends, year-over-year X.X% in trend XX.X% the QX, the This during year. For XX we improvement from basis represents compared a to or the $XXX.X prior decrease and QX revenues same-store second year basis. on a revenue were sequential point

to modulate trends. alignment XX% revenue continue we In operating we and QX, base to work declined our strategically initiatives. year-over-year, implement with continue to Company-wide, transformative cost in expenses cost

certain quarters. the outsourced expect we we the see from in QX, and these cost efforts in to functions benefit optimization upcoming Notably, technology

invest exercise to with management order centralized markets an resources areas our on for the those serve in costs in growth. prudent will we preserve We in to to and key optimizing emphasis continue cost future

prior XX.X% year result, adjusted compared basis Adjusted $XX.X X.X% EBITDA the to an of of As was the increase XXX million totaled in quarter, second $XX.X a approximately of XX% XXXX, in margin million improvement EBITDA quarter representing year-over-year. or an points.

the and cost adjusted goals. our trends, revenue continued by strategic growth progress controls EBITDA The against the operational in fueled improving was

of we adjusted result the As in meaningful half first growth to a in year, EBITDA our expect of the continue performance XXXX.

overall digital of revenues Total million, our same-store In digital QX revenues our total up returned X.X% year-over-year and growth on basis. $XXX.X quarter, to were the accounted revenues. a total in for XX% second

pressures digital are an the media year-over-year encouraged Given basis ongoing compared very XXX we monetization XX.X% by digital our in but advertising decline saw revenues performance. the to first quarter's rates, same-store point improvement significant

Looking a and due sell-through. advertising optimization increased ahead, digital including more continued comparisons we expect rebound in initiatives, favorable to

Company's addition, and QX foundation performance year. in of digital this and improvement our key of future solutions both are the In for QX notable digital marketing businesses growth. we expect for subscription digital-only revenues strategic The in components

digital-only million. QX. our monetization nearly grew declined slightly year-over-year actions intentional reflects volume. versus subscriptions This subscription increased acquisition short-term X% long-term paid optimizing costs by basis, same-store to a Digital-only revenues XX% from continue to $XX prioritizing year-over-year and On

These the paying half the are subscribers our and to grow delivered growth strategy. second as pricing continued continue the profitable continue digital-only XXXX in as acquisition on in on is of off, is we actions the well optimization level ARPU to ARPU, focus to highest evidenced years. those expected X% two which as year-over-year throughout of more efforts retention customer by

the decline limited year-over-year in a the revenue Despite X.X% to year. same-store decrease in advertising secular headwinds, print marking was the past basis, smallest observed on

compared XXXX. of to improved also Our QX points sequential XXX basis by trends

paying in versus the results year. percentage to and routes We revenue routes XX% addressing driven our are continue prior open implemented actions subscription to declining promising show the we enhance of believe in the by improvements subscriber off print The over experience. the delivery investments distribution with open challenges

a X.X% includes negative experienced overall faced commercial lower In as attributed well basis. syndicated our print which on a decline as digital CPMs, growth, trends, year-over-year and which revenue stream Despite can impact delivery muted media impacted be recent the this third-party revenue of decrease on category, reduction QX, two commercial a of in our This other had content. negatively Company's revenue. print years the same-store to which a monetization volumes

same-store the in increase margin a Moving to million, business, total Adjusted in an solutions quarter was of EBITDA basis. $XX.X points our XX year-over-year. increase digital revenue second on $XXX.X basis quarter was second for million, of the marketing year-over-year segment an a XX.X% the representing X.X% and of

The to count average QX monthly from year customer across increased churn segments. customer higher prior due the but compared lower to decreased period margin the X.X%

ARPU However, prior versus core platform period. year high reached QX, the growing XX% in a record

in and Additionally, reflect increase outstanding trends our the budget year-over-year, emphasis retention QX. basis continued delivering We on XX an focus reaching portfolio XX.X% positive product these points of our saw experience. on believe client an

billion. quarter, of net prior approximately our generated $X.X substantial We the Let's translating marking balance $XX.X compared of to the now $XX.X stood million, cash second flow second quarter, $XXX.X period. of at million of a to the to the shift increase cash million in the year sheet. debt At end balance free

of Looking and ahead, in significant with million. we to to $XX full year, free generation anticipate between QX this year flow cash expected million the be QX $XXX

ended with debt. total We billion approximately quarter the $X.X of second

adjusted improved to quarter Our of in first down $XX.X lien leverage million X.XXx, EBITDA total and pay debt the decreased second reflecting net performance.

we using year. a $X.X the net repaid estate the result, first priority well sales. During of Xx leverage our as us. July, below repayment an end proceeds our we for real the And Debt to million asset term lien expect additional of by top recent loan from a fall remains

million of cash the expected approximately combined $XX our sizable We a which of free improvement, continue our real $XX million, with estate for sales meaningfully to to debt contribute flow the remainder pipeline will to maintain repayments year.

litigation to second additional of the by At Federal Overall, of appropriate felt lawsuit the lawsuit Google an this end enter took action against state Department the time in level. Justice filing at well was the Gannett parallel actions from legal as Court. the quarter, the we as given a

negatively question. impacted And frame any perspective, to from on billions flows the operating the Gannett's time do meaningful We cash of our during feel financial or position, of action course in believe in in as importantly, were claim. the we over revenue advertising of not this have expect outlined that confident expenses We legal dollars impact a the lawsuit.

now Turning guidance. to

our respect leverage. We first are described prior revenues, earnings reiterating lien guidance and today's in as same-store total with revenues net release to

we million. $X quarter are EBITDA XXXX our cash of full second result by flow year our a and performance, outlook increasing both for free As adjusted

translates of to We to million now growth expected $XXX which full $XXX EBITDA adjusted million, between expect XX%. year nearly year-over-year

growth the cost management due to improving ramping QX expect initiatives. of and in We trends year-over-year same-store significant revenue our

is representing of expected flow to in XX%. cash at to now $XXX $XX million, be the million a range conversion least of rate Free

We also to both net the raised our cash by and operating net XXXX $X million. for provided full by year activities outlook income attributable

For of the expect a net Gannett of to to $XX net income year, income net to loss million from million. range attributable full we a $XX

cash is range the $XXX million to in While million. activities by $XXX expected operating be to provided of

wrapping performance reiterate just we've Before the up, QX. progress I want and we excited about made the are Company's in how to

XXXX with year the we of deal the with half of a The momentum, entering second great first remarkable optimism. of are and half closed

throughout Our the and for meaningful Gannett unwavering is XXXX as in we and to focus on into stakeholders. value create trends these turn, sustaining Company's positive continue transform XXXX

closing back operator I'll to then go now questions, for for we Mike to hand some thoughts. the it and will back

Mike Reed

Okay. Great. Thank you.

you've here team at the into move in led the results. So we second this year. and we of high performance in and we unwavering I'm this morning, resulting as financial of a the proud are a favorable quarter really position, solid second We level Gannett believe, by achieved a operating half of catalysts. as first year, The backed number half the the the year to the heard of performance of incredibly dedication strong focus of in has

a cash catalysts, Let digital up, improving on keep a review and free of me significant review driving quick will revenue EBITDA revenue do quick revenue of of total -- going sequential percentage growth, approximately same-store basis. achieving those adjusted a and growth, that a flow XX% our few now trends

in while strategy sustaining DMS and dynamic markets, growth leaders debt in adjusted and Patel, revenues revenue renewed digital-only EBITDA subscription business local strong platform MTS digital-only our highs achieving our a content ARPU four focus core through record to Sustaining while ARPU, deleveraging and revitalized increasing Kristin and repayment, finally, through Taller adjusted growth Joe. adding Jason rapid and EBITDA, in Roberts, on Chris

course, the and With about lie us unlocking achieved continue beyond. we are during remarkable forward we driving these ahead. The and fills remainder and results pride confident to of throughout determined opportunities us shareholder catalysts delivering solid excited significant and with that of are progress the QX XXXX value

Thanks, quarter. today. on forward months everyone, to joining in three the for our us look Thank in again updating you. progress We you third

Operator

gentlemen, Thank today's you teleconference. this very sir. Ladies concludes and much,

lines your disconnect this your may participation. you Thank You at time. for

Gannett (GCI) 3 Aug 232023 Q2 Earnings call transcript