Entravision Communications Corp. on Tuesday released its Q4 and year-end 2023 earnings report, and in doing so also shared a “Digital Commercial Partnerships Business Update.”
The parent of Facebook, WhatsApp and Instagram told Entravision on Monday (3/4) that it intends to wind down its Authorized Sales Partner (ASP) program by July 1.
This could reduce the company’s EBITDA and revenue in a significant way. Entravision even cancelled its earnings call scheduled for 5pm Eastern today as it digests the news from Meta.
Through Entravision Global Partners, the publicly traded company’s digital commercial partnerships business, the company acts as an intermediary between primarily global media companies and advertisers. These global media companies include Meta, for whom Entravision acts as an Authorized Sales Partner (ASP).
While Entravision is also an ASP for ByteDance, X Corp., Spotify, Snap and Pinterest in 31 countries throughout the world, the Meta ASP program has been a big revenue generator for the company led by CEO Michael Christenson.
Just how important has the Big Tech goliath been for the company whose roots are in U.S. Hispanic broadcast media but today is a worldwide ad-tech operation generating the majority of its revenue from Digital?
For FY 2023, Entravision estimates Meta’s ASP program represents approximately 41.25% ($23.8 million) of its $57.7 million total consolidated EBITDA and $586.4 million of Entravision’s $1.107 billion of total consolidated revenue — 53%.
“Entravision has initiated a review of its operating strategy and cost structure and will provide an update on associated plans as soon as practical,” the company said in a statement.
“While we are disappointed in Meta’s decision, we are confident in Entravision’s long-term opportunities given the strength of our advertising and marketing platforms and the need for our solutions globally,” Christenson said. “We are conducting an extensive review of our strategy and cost structure to reinforce our operating foundation and ensure we are best positioned to capitalize on Entravision’s global, market-leading advertising, media and technology solutions. Our balance sheet is solid with a strong cash position to support the business as we navigate these changes.”
A NET LOSS COMES IN Q4
Ahead of the release of Entravision’s earnings report for the final three months of 2024, two analysts polled by Yahoo! Finance offered revenue estimates. This put the consensus prediction at $308.47 million.
Entravision easily beat that estimate, with a 8% gain to $320.06 million from $296.3 million.
However, on a GAAP basis, consolidated EBITDA plunged to $16.25 million from $36.52 million as Entravision widened its net loss to $18.21 million (-$0.21 per share) from $1.63 million (-$0.02). The EPS estimate based on the two analysts’ forecasts wass $0.07. That said, one analyst forecasts earnings per share of $0.14, while the other put his forecast at $0.00.
Entravision’s Q4 dollars were indeed fueled by Digital, which saw a 19% increase year-over-year.
In contrast, Television was down 32%, while Audio, which includes Entravision’s radio stations, were down by 31%.
A WALL STREET SLIDE COMMENCES
As word of Meta’s decision on its ASP program became known, Entravision investors began to sell their shares in a significant way.
In immediate after-hours trading on Tuesday, EVC, which trades on the NYSE, was down $1.70 per share to $1.87. EVC completed Tuesday’s trading with a 9 cent decline, to $3.57.
