The second quarter broadcast media earnings season’s parade of results gained momentum on Wednesday, as Townsquare Media‘s executive team gathered to share the “Local First” company’s fiscal performance for the three-month period ending June 30.
How did the NYSE-traded operation led by CEO Bill Wilson, Chief Operating Officer Erik Hellum and CFO Stu Rosenstein perform in Q2? Net revenue sailed past Wall Street estimates as non-cash impairment charges impacted the company’s overall numbers.
What helped Townsquare in the second quarter is its Digital Advertising arm, which rose 1% year-over-year to $41.52 million from $41.13 million, as “Subscription Digital Marketing Solutions” continued its reset, falling 12.9% to $18.52 million from $21.27 million.
Combine the financial figures, and Digital was off 3.8% to $60.04 million from $62.39 million in Q2.
Broadcast Advertising was statistically flat, moving to $53.63 million from $53.72 million.
Because of the adjustments ongoing in the Subscription Digital Marketing Solutions arm, Townsquare Media net revenue moved to $118.23 million, from $121.23 million. This met the company’s own Q2 revenue guidance, and surpassed the consensus estimate of $117.84 million offered by 2 analysts who shared their forecasts with Yahoo! Finance. Townsquare also exceeded its profit guidance, with adjusted net income moving to $2.33 million ($0.14 per diluted share) from $8.41 million ($0.45). However, the two analysts that chimed in to Yahoo! Finance had pegged EPS coming in between $0.30 and $0.42.
Impacting the overall numbers was a $32.64 million impairment charge against its broadcast licenses. This led to a wider net loss for Townsquare, moving to $48.86 million from $2.7 million. Impairment charges are not tied to a broadcast media company’s performance but rather variables such as the radio industry at large (based on BIA Advisory Services radio broadcast projections, updated on Wednesday) and rising debt yields of Townsquare’s broadcasting peers. Most importantly, it neither reflects actual operating results nor a company’s cash results and is a non-cash accounting charge based on historically recorded purchase price allocations made when Townsquare Media bought the radio stations some 10 or more years ago.
Adjusted Operating Income declined to $5.42 million from $6.03 million. Adjusted EBITDA excluding Political moved to $25 million from $28.27 million. Political revenue in Q2 came in at $1.24 million, rising from a lackluster Q1 2024 and Q2 2023 political ad dollars totaling $344,000.
Speaking on the company’s 8am Eastern earnings call for investors and analysts, Wilson took note of how Townsquare continues to “improve and strengthen as expected,” emphasizing the sequential quarter-over-quarter improvement seen at the owner of such radio stations as spoken word giant “New Jersey 101.5,” its No. 1-billing radio station, and No. 2 biller WYRK-FM in Buffalo, the largest Country radio station in Western New York.
That said, the digital business is a “true differentiator” for Townsquare, with mid-to-high single digit growth forecast as the Subscription Digital Marketing Solutions arm adjusts its revenue-generation recipe.
Then, there are the radio stations, and when combining the mid-and small-market broadcast properties with the advertising tied to digital services, the fiscal performance “fortified my confidence in our business model,” Wilson shared with those on the call.
In fact, local agencies seeking a digital advertising partner have turned to Townsquare Media, Wilson said, and the company is looking into White Labeling its digital broadcasting assets given inquiries from other operators in the local media space.
This could further fuel the No. 1 revenue driver for Townsquare, as digital revenue products and services represents 52% of Townsquare’s total revenue. This is more than double the industry average. Some 51% of Townsquare’s total profit came from digital solutions.
On the call, Wilson noted that Townsquare anticipates 4% growth in its Q3 digital advertising revenue, thanks primarily to Programmatic growth. National digital is forecast to be down by roughly $1 million, reflecting a more than 30% year-over-year decline as national advertising at Radio continues to be a challenging segment for broadcast audio companies.
Rosenstein, in breaking down the numbers, noted that Live Events “is a marketing arm of the company” today, a big shift from the philosophy of former CEO Steven Price. As such, it is now a secondary revenue-generation tool for Townsquare Media.
Lastly, Rosenstein noted that Q3 2024 will see EBITDA come in between $25 million and $27 million, as he narrowed Townsquare’s full-year revenue guidance to a range of $440 million to $455 million, with EBITDA for FY 2024 coming in between $100 million and $105 million.
In pre-market trading on Wednesday, TSQ was trading at $10.70, down 2.4% from August 6’s closing price. Townsquare stock is up 3.8% year-to-date and is one of the local media industry’s strongest performers on Wall Street.
