Updated at 1:55pm Eastern
On its surface, some would assume that “digital first” local radio station owner and digital media denizen Townsquare Media didn’t have a particularly strong first quarter. Yes, political advertising wasn’t so robust. Subscription digital marketing revenue was down in the mid-double-digits.
Yet, while net revenue was down, as was adjusted EBITDA, it met the company’s guidance as operating income rose by 56.7%. That’s a sign, says CEO Bill Wilson, that Townsquare is building momentum across the year, setting up the publicly traded company for a strong 2025.
On its Q1 2024 earnings call, Wilson shared how the company’s radio stations gained market share in the first three months of the year, outperforming its competitors.
Strong cash flow generation, investing in its digital growth engine and gaining financial flexibilities were other topline points Townsquare CEO Wilson shared, with analysts on the line that had opted not to fully participate in a concurrent Q1 2024 earnings call scheduled by iHeartMedia after Townsquare set the time and date for its own call for analysts and investors.
Wilson, in his prepared remarks, reiterated points of differentiation between Townsquare Media and other publicly traded radio station owners, noting that it is far from a broadcasting company. Indeed, Digital represents 53% of first quarter total net revenue and adjusted operating income.
In line with the company’s expectations, overall Q1 net revenue fell by 3.4% to $99.63 million, from $103.11 million. That surpassed the consensus estimate of $98.64 million offered by 3 analysts polled by Yahoo! Finance.
Adjusted EBITDA decreased 9.9% year-over-year, moving to $17.52 million from $19.44 million when including political, interest, capital expenditures and taxes.
Adjusted operating income declined to $22.74 million, from $24.79 million.
Total it all up, and Townsquare Media swung to net income of $1.55 million ($0.06 per diluted share), swinging from a Q1 2023 net loss of $1.94 million (-$0.14). This beat the Street estimate of $0.05.
On an adjusted basis, net income declined to $480,000 ($0.03) from $1.97 million ($0.11).
A Q2 DIGITAL DECLINE, WITH SWIFT MODERATION
A warning was offered during Wilson’s earnings call regarding second quarter pacing tied to digital.
Referral traffic from Meta to Townsquare Media’s national websites (like TasteOfCountry.com, Loudwire.com, etc.) was negatively impacted given changes Meta has made on their platform.
However, RBR+TVBR confirmed midday Thursday (5/9) following the company’s earnings call, Townsquare has no relationship with the ASP program. This makes Townsquare’s situation unlike that of Entravision Communications.
As Entravision noted earlier this year, Meta — the parent of Facebook, WhatsApp and Instagram — intends to wind down its Authorized Sales Partner (ASP) program by July 1.
For Q2, net revenue is expected to be between $117.5 million and $119.0 million, right in line with Street predictions, while adjusted EBITDA is expected to be between $26 million and $27 million.
For the full year 2024, net revenue guidance was reaffirmed, as Townsquare’s leadership team expressed confident that its “long sustainable runway” ahead will continued to bring FY 2024 of between $440 million and $460 million. Adjusted EBITDA for FY 2024 is still expected to be between $100 million and $110 million.
Unlike the iHeartMedia call, questions were given by analysts. Michael Kupinski of Noble Financial Capital Markets asked about the types of subscribers Townsquare Interactive, its digital arm, is gaining, and about its new Phoenix-area operation. Growth is indeed being seen, and the Charlotte office for Townsquare Interactive revenue and subscriber growth is strong “particularly this early,” Wilson said.
Jim Goss of Barrington Research inquired about Townsquare Interactive as well.
BROADCAST ADVERTISING REVENUE DOWN SLIGHTLY
With subscription digital marketing solutions revenue down 15.3% to $18.25 million, from $21.56 million, digital advertising revenue inched ahead by 1.3%, to $34.16 million, from $33.71 million.
While digital indeed represents more than half of Townsquare’s revenue, broadcast advertising remains the biggest line-item dollar generation arm for the company. And, broadcast advertising revenue declined by 1%, to $45.46 million, from $45.92 million.
