Yes, net revenue was up for Townsquare Media. But, it wasn’t as big of a result as what a trio of financial analysts thought the “local first” digital media solutions and mid-to-small market radio station owner would produce in the third quarter of 2022.
Furthermore, even on an adjusted basis, net income was down year-over-year, falling short of the EPS estimate offered by those three Wall Street pundits.
Net revenue in Q3 improved to $120.64 million, from $111.28 million.
The consensus estimate on revenue from the three Wall Street analysts who track Townsquare Media was $122.32 million.
Meanwhile, adjusted net income fell to $8.295 million ($0.47 per diluted share), from $10.45 million ($0.54). The analysts polled by Yahoo! Finance expected earnings per share of $0.57.
One big reason the adjusted net income declined is a $10.3 million impairment charge. However, as previously stated in RBR+TVBR‘s coverage of quarterly earnings reports, these impairment charges largely have no correlation to a company’s actual performance.
As such, a look at adjusted EBITDA may be a better way to gauge how Townsquare Media performed in the third quarter. And, adjusted EBITDA was up — even on an ex-political basis, where it climbed to $29.557 million from $28.662 million. Political adjusted EBITDA was $1.35 million in Q3, compared to $489,000 one year earlier.
Overall net income declined to $2.798 million ($0.13 per diluted share) from $12.89 million ($0.64).
BROADCAST ADS DRIVE THE REVENUE
While CEO Bill Wilson has repeatedly explained to institutional investors, and those on the company’s now-traditional 8am Eastern earnings calls each quarter, that Townsquare Media is a “Local First” digital marketing and ad solutions company that happens to have Radio in its DNA, Broadcast Advertising remains the biggest revenue generation component of the company.
In Q3, broadcast advertising revenue climbed to $59.27 million, from $57.31 million.
Digital advertising grew by 21.3% year-over-year, but the total in Q3 was $37.02 million, rising from $30.52 million.
Subscription Digital Marketing Solutions climbed by 9.7%, rising to $23.19 million from $21.13 million.
Offsetting these gains was an increase in direct operating expenses, moving upward to $83.99 million from $75.72 million.
How’s the liquidity for Townsquare Media? As of September 30, the company had a total of $27 million of cash and cash equivalents and $530.8 million of outstanding
indebtedness, representing 4.79x and 4.54x gross and net leverage, respectively, based on Adjusted EBITDA for the twelve months ended on the final day of the third quarter, of $110.9 million.
In prepared comments made ahead of the 8am Eastern earnings call on Wednesday, Wilson touted “another record setting quarter of results” for Townsquare Media, results he said “clearly demonstrate the undeniable success and differentiation of Townsquare’s transformation into a Digital First Local Media company.”
But what about the consensus estimate misses? Wilson said Townsquare “reached all-time Q3 highs with net revenue growth of 8% year-over-year, and Adjusted EBITDA growth of 6% year-over-year,” which met the company’s own guidance.
Wilson also expressed pleasure in the net leverage decline, as the company continues to make progress toward its 4x net leverage target.
What can investors expect to see from Townsquare Media in Q4, and for the full year of 2022? For the fourth quarter of 2022, net revenue is expected to be between $116.0 million and $122.0 million (up 5% to 10%), and Adjusted EBITDA is expected to be between $27.7 million and $30.7 million (up 8% to 20%).
For the full-year 2022, net revenue is expected to be between approximately $459 million and $465 million (up 10% to 11%); Adjusted EBITDA is expected to be between approximately $113 million and $116 million (up 8% to 10%).
