Q2 2022 Entravision Communications Corp Earnings Call
Greetings and welcome to the Entravision second quarter 2022 earnings conference call.
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It is now my pleasure to introduce your host Kimberly Astra came up Investor Relations.
Thank you.
You may begin.
You operator, good afternoon, everyone and welcome to Entravision second quarter 2022 earnings conference call joining.
Joining me today are Walter Ulloa, Chairman, and Chief Executive Officer, and Christine <unk> Chief Financial Officer.
Before we begin I must inform you that this conference call will contain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ.
Please refer to <unk> SEC filings for a list of risks and uncertainties that could impact actual results.
This call is the property of Entravision Communications Corporation.
Any redistribution retransmission or rebroadcast of this call in any form without the express written consent of Entravision Communications Corporation is strictly prohibited.
So this call will include non-GAAP financial measure.
The company has provided a reconciliation of these non-GAAP financial measures to their most comparable GAAP measures in today's press release.
The press release is available on the company's website and was filed with the SEC on form 8-K.
In addition, all pro forma figures, including revenue operating expenses and consolidated adjusted EBITDA noted throughout the prepared remarks includes the contributions of media Donuts and 365 digital in the prior year period.
I will now turn the call over to Walter Ulloa, Chairman and Chief Executive Officer.
Thank you Kimberly and good afternoon, everyone. We appreciate you joining us for Entravision second quarter 2022 earnings call.
And Trevor just performance in the second quarter capped off a strong first half of 2022.
Net revenue for the second quarter totaled $221 7 million up 24% year over year on a pro forma basis revenue increased 16% over the prior year period. The continued growth of our digital segment combined with improvements in our core television and audio businesses.
Drove the strength during the quarter.
For the six months ended June 32022 revenue totaled $418 9 million up 28% year over year on a pro forma basis revenue for the first six months of 2022 increased 20% over the prior year period similar to the quarter year to date revenue benefited from growth in our <unk>.
Digital segment as well as improvements in our core television and audio businesses.
Consolidated adjusted EBITDA totaled $22 5 million for the second quarter up 26% year over year. What is so impressive about our second quarter EBITDA growth is that we had $5 4 million of non returning revenue from the prior year same period, and we still managed to grow EBITDA, 26% in the quarter.
For the six months ended June 32022, consolidated adjusted EBITDA totaled $40 6 million up 27% year over year.
Even as our topline continues to grow we have successfully maintained our lean cost structure, having right sized our expenses over the last few years. Despite current macro conditions. We do not currently see a need to make any additional expense cuts that said expense management will continue to remain core to our operations.
Undoubtedly drives our EBITDA free cash flow and ability to provide returns to our shareholders.
Speaking of shareholder returns I am pleased to announce that our board of directors has approved a cash dividend for the second quarter of 2022 of two five.
For share payable to shareholders on September 32022.
During the quarter. We also continued buying back shares under our $20 million share repurchase program, bringing the total repurchase to date to approximately $11 3 million.
With that as a background, let's take a further look at each of our three segments beginning with our largest digital.
I'm very pleased to report that during the second quarter all of our digital units delivered solid revenue growth while at the same time reporting positive operating margins digital segment revenue represented roughly 78% of consolidated revenue for the second quarter and totaled $174 4 million up 34% year over year.
Top achievements for the segment during the quarter included our strategic territorial expansion within Latin America, Southeast Asia, and sub Saharan Africa as well as the success of our mobile performance business led by <unk>.
And tremendous digital mission is to continue building, our global digital marketing sales operations and emerging territories, where our critical mass connect consumers exists together with a large and growing advertising industry based on these criteria, we have expanded across multiple territories and continents, both organically and through strategic tuck in.
Acquisitions at present Entravision digital operations spanned 35 different countries and service over 7000 clients.
To deliver upon this mission our digital operations provide two main offerings.
First is our commercial representation service for some of the world's leading social and technology platforms. In this business due to a phenomenal sales team to provide staffing onboarding and workflow services, we continue performing strongly.
Second offering entails our mobile user acquisition solutions that include cutting edge proprietary technology unique performance services and dynamic creative optimization workflows. These mobile solutions are offered in Latin America, Europe Africa, and Southeast Asia as Standalone services with that as a background. Let me provide some examples of these.
Services and action, starting with Latin America, Entravision Cisterna interacted delivered solid results for the second quarter with revenue increasing 9% over the prior year fueled by our commercial representation partnerships with meta and satisfy.
Turning to methane particular on July 1st Entravision Cisneros interactive officially expanded its partnership with meta in Honduras and El Salvador. This brings our Latin American partnership with meta to 11 total countries as part of this expanded partnership Entravision as narrow as interactive will provide strategic support creative expertise and content.
Element from meta advertisers in the region.
<unk> Interactive has had great success in Latin America over the past five years training more than 5000 people, including agencies and advertisers to leverage the meta platform for their advertising needs our geographic expansion into our 10th and 11th of Latin American countries is evidence of our historical success and we are very excited to.
See our efforts at both go to market events are already taken place throughout Honduras, and El Salvador was setup and training happening at each of our local offices in southeast Asia. Entravision is immediate Donuts also delivered very strong results with revenue improving for the second quarter, 57% year over year on a pro forma base.
Entravision media Donuts revenue growth was largely driven by our success with Twitter and Tic Toc, along with strong mobile performance similar to our digital unit Entravision media Donuts continues to expand its geographic reach and during the second quarter broadened its operations into Bangladesh, Myanmar, Nepal and Cambodia.
Latin America Asia Africa Sub Saharan Africa is amongst our most recent expansion territories and we have been very pleased with our performance in this region for.
For the second quarter Entravision 365, digital revenue increased nearly five times that of the prior year on a pro forma basis and May Entravision 365 digital opened its operations in Kenya to serve local companies with advanced branding performance at other creative team.
Sub Saharan Africa has over 500 million digitally connected consumers, who are technologically savvy make it in a favorable region to further expand.
<unk>, our mobile user acquisition programmatic AD Tech platform headquartered in Barcelona, Spain also performed very well during the second quarter with revenue improving 162% year over year schematics highly competitive offerings remain a go to where the gaming fintech and mobile delivery industries in the second quarter, we continued to Briggs.
<unk> across the globe with territory expansion into Asia, and Europe . We also unveiled several AD tech product performance enhancements and debuted our new team of professionals solely dedicated to work on gaming apps and mobile performance.
With many different digital brands now part of the Entravision family, we have taken the important step of unifying all of our marketing communications under a single umbrella to manage this entire process on a global basis, we have appointed our very own Cardona Saturday as executive Vice President of Global marketing Arena will be an important part of our expansion effort working closely with.
Each of our global businesses on branding messaging sales and training. We're excited to take this step in our marketing and sales operation with Corona's promotion.
Now, let's turn to our television segment, which comprised 15% of revenue for the second quarter TV revenue was $32 4 million in the second quarter down 5% compared to the prior year period.
As noted last quarter, we anticipated our television revenue would decline this year, primarily to the discontinuation of three Univision affiliates at the end of 2021, excluding those three Univision affiliate markets total TV revenue was up 11% year over year, excluding those three Univision affiliate markets.
And $2 8 million in political spend in the second quarter core TV advertising increased 1% national core advertising revenue increased 1% in local core advertising revenue increased 1% year over year.
Category continues to face pressures, excluding the three discontinued Univision affiliations auto AD revenues were down 3% in the second quarter year over year. While we initially believed the auto category would recover in the second half of 2022, but for a number of reasons, including high gas prices and continued supply chain disruption impact.
And inventory.
<unk> in this key advertising category is unlikely to happen in the second half of 2022.
Nevertheless, strong performance in other AD categories has nicely offset the decline in auto excluding the three discontinued Univision affiliates that ended in 2021 travel and leisure restaurants retail grocery financing beverages had strong growth in the second quarter compared to the prior year.
As a result of the current market conditions national advertisements order cycles have shortened considerably reducing our overall sales visibility Fortunately local ads have been fairly resilient with consistent sales cycles.
Turning to political it was certainly an encouraging quarter political advertising perspective, while we had initially anticipated approximately $11 million in total political AD revenue in 2022.
Following a strong second quarter in which we generated $3 4 million in political AD sales and our television and audio units. We now expect full year political AD revenues for TV and audio combined to be 17% to $19 million.
The impressive performance was primarily driven by the Nevada elections, the California online gambling initiatives and the Texas primary all of which are recognized the importance of Latino voting population and of particular note in Texas, California, and Nevada, we are seeing more political advertisers reserving TV spots closer to election day. This is.
The purchasing behavior, we have not experienced to this extent with past election cycles.
With regards to our ratings performance during May 2022 for adults 18 to 49 in early local news our Univision television stations finished ahead of their Telemundo competitors in 12 of 14 markets in late local news. We finished ahead of Telemundo competitors. Among adults 18 to 49 and 11 of 14 markets plus one tie.
Actually our early and late local newscasts are ranked number one or two against English and Spanish competitors in nine markets, including ties.
Lastly, I'll speak to our audio segment, which comprised the remaining 7% of second quarter revenue audio revenue totaled approximately $14 9 million for the second quarter up 6% year over year, primarily due to an increase in local advertising revenue, excluding political spend of $628000 in the second quarter of 2022 core audio revenue.
<unk> increased 2% versus the second quarter of 2021, the audio segment cash flow generation was also strong and improved 8% in the second quarter.
As compared to the prior year.
With regards to the advertising categories travel and leisure retail restaurants product brands financed beverages and entertainment all delivered strong growth versus the.
The prior year period.
For TV auto audio advertising continued to struggle during the second quarter, delivering a negative 5% performance year over year looking at our audio segment ratings performance for the spring book.
Among Spanish language radio stations Razo electrical at the show was ranked number one in PM drive in nine out of our 11 markets released for spring among Hispanic adults 25 to 54, including ties and in six markets. Among Hispanic adults 18 to 49.
Across our 11 owned and operated radio stations, the Roswell electrical out to show reached more than 469000, Hispanics 25 to 54 on.
On our <unk> network, a mid day programming ranked as a top choice among Latinos.
Mid de La <unk> ranked as a top three Spanish language Greg.
Radio station in four of our six Trico Lord markets released for spring among Hispanic adults 18 to 49, including ties.
Before speaking further I will turn the call over to Chris Young our CFO to discuss our second quarter financial performance in further detail and to provide our third quarter pacings, Chris Thanks, Walter and good afternoon, everyone. As Walter discussed revenue for Q2, 2022 totaled $221 7 million, an increase of 24% from the <unk>.
Second quarter of 2021.
For our digital segment revenue totaled $174 4 million in the second quarter up 34% year over year and up 22% on a pro forma basis as compared to Q2 of 2021.
For our television segment total revenue was $32 4 million in the second quarter down 5% year over year, excluding political core advertising revenue was down 20% year over year. However, excluding the revenue impact from the three discontinued Univision affiliates total revenue increased 11% year over year.
Retransmission revenue for the quarter totaled $9 million, which was down 3% year over year, mainly due to the loss of the three Univision affiliates.
Lastly for our audio segment revenue totaled $14 9 million in the quarter up 6% from the prior year, excluding political core audio revenue was up 2% over Q2 of last year.
Operating expenses in the second quarter of 2022 totaled $47 4 million up 14% from $41 4 million in the prior year period.
Excluding operating expenses related to our immediate donuts and 365 digital acquisitions operating expenses were up 9%, primarily due to our revenue growth and increases in salary corporate expenses increased by 16% to total $8 5 million for the quarter compared to $7 3 million in the same quarter of last year.
Mary drivers of corporate expense increases were increases in noncash stock based compensation expenses and salary expenses.
During the second quarter, we repurchased approximately 600000 shares under our $20 million share repurchase program, bringing our total repurchases to date to $1 8 million shares or a total of $11 3 million.
Consolidated adjusted EBITDA totaled $22 5 million for the second quarter up 26% from the $17 8 million in the prior year period.
Free cash flow as defined in our earnings release was up 15% to $14 3 million in the quarter or a conversion rate of 64% of adjusted EBITDA compared to $12 4 million in the second quarter of the prior year.
Net income attributable to common stockholders was up 8% to $8 5 million compared to $7 $9 million recorded in the prior year period.
Diluted earnings per share for the second quarter of 2022 were 10 cents.
Compared to <unk> <unk> per share in the same period of last year, excluding a noncash charge of approximately $1 million relating to a change in fair value of contingent consideration earnings for the second quarter 2022 were <unk> 11 per share.
Cash paid for income taxes was $6 2 million for the second quarter compared to $3 3 million in same quarter of last year. The increase was primarily due to our making two quarters' worth of tax tax payments during the quarter as opposed to just one in the prior year.
Net interest expense was $1 6 million for the quarter down 9% from $1 8 million in the same quarter of last year net cash interest expense was $1 2 million for the second quarter down 27% compared to $1 6 million in the same quarter of last year.
Cash capital expenditures for Q2 totaled $1 7 million, we remain on track for roughly $12 5 million and full year cash capital expenditures.
Turning to our balance sheet cash and marketable securities as of June 32022 totaled $184 2 million.
Total debt was $210 8 million net of $75 million of cash and marketable securities on the books, our total leverage as defined in our credit agreement was one four times as of the end of the second quarter net of total cash and marketable securities. Our total net leverage was 0.3 times.
Turning to our pacings for the third quarter of 2022 as of today revenue from our digital segment is pacing plus 24% over the prior year.
Our television segment is pacing minus 4% over the prior year period with core TV advertising, excluding political book, thus far in the quarter pacing at minus 14% as Walter noted, we expect our television revenue to decline in 2022 from the discontinuation in 2021 of three of our Univision affiliates.
That said, we more than make up for any television revenue decline with our digital segment performance, excluding the impact of our three discontinued Univision affiliates TV is pacing plus 6%.
Lastly, our audio segment is pacing plus 4% over the prior year period with core audio excluding political pacing at a plus 1% all in our total revenue compared to last year is pacing at a plus 17% with this I will turn it back over to you Walter.
Thanks, Chris as I previously highlighted we are very pleased to see continued growth across all our digital platforms and just the past two years alone. Our digital segment revenue has grown by over 13 times.
As I mentioned on our last call, we made a strategic investment in Jackup digital which has an exclusive commercial partnership with Tic Toc in Pakistan Jack of digital taps into a market of over 100 million connected consumers and as part of a vibrant emerging economy with strong advertising spend these elements.
Dealing with the core aspects of our digital mission that I spoke about earlier.
Not only are we entering into representation partnerships with new social and technology platforms and new territories, but we are also cross leveraging organically our current partnerships from one region to another for example, we expanded our partnership with the in gaming advertising platform, Enzo, which we now represents two entravision 365 digital and <unk>.
Africa, Entravision media Donuts in Southeast Asia, and Entravision Cisneros Interactive in Latin America and.
Another example is our recent exclusive partnership between the Entravision Cisneros interactive intelligence that wouldn't be sealing Entravision Cisneros interactive has been appointed as the exclusive advertising sales partner for VIX. The over the top platform of Televisa only be soon in 10, Latin American markets.
Given our solid balance sheet, we remain active and continue to look for opportunities to invest or acquire companies that will further enhance the digital services, we provide to our growing global customer base.
As we look to the second half of 2022, we believe that political advertising spend will also be a key driver of revenue growth. While we expected strong political growth in 2022, the amount spent by the political industry in the first two quarters still months away from the midterm elections was a very pleasant surprise.
This increase in political AD spend provides further evidence that both political parties understand the importance of Latino voters to local and national elections.
In fact, a study by the Pew Center found that in Battleground states in the 2020 election as a share of eligible voters. Latino voters grew more than any other racial or ethnic group. We believe this bodes well for our television and audio segments in the back half of this year as political parties Rev up their AD spending to the midterm elections.
<unk> conditions, including inflation in recessionary concerns.
Though some challenges to the broader market as we progressed through 2022 with a strong balance sheet streamline expense structure and a team of some of the best professionals in our industry Entravision is well positioned for continued success.
I want to extend my gratitude to our entravision teams around the world for their continuous efforts in performance and I want to thank our shareholders for your support.
That concludes our prepared remarks, Chris and I would like to open up the call for your questions operator.
Thank you very much sir.
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One moment, please widely poll for questions.
We have a first question from the line of Michael Kaplinsky with Noble capital markets. Please go ahead.
Thank you good afternoon, everyone.
Congratulations on a strong quarter.
I have a couple of questions I know that you recently expanded your footprint in Latin America. I was just wondering have you now expanded what I would consider the low hanging fruit what are the opportunities still left in Latin America. What countries do you still think you might be able to expand into if you can just give us a sense.
The opportunity to grow outside of the regions that you currently have.
Michael It's Walter.
Yes, we did expand in.
Our meta partnership in.
Two new territories in Latin America, as far as what else might be available to us and thats.
That's something that.
That met the has to decide.
We work very closely with them, we try to do the best we can to represent their platform in all of our Latin American markets.
<unk>.
Like I said, we certainly try to to mirror their professionalism and and given the platform the best representation possible.
Beyond that.
We're in contact with them regularly and we're always looking for new opportunities in other parts of the world to represent meta.
And I know that.
Lot of investors focus on the U S economy and how that's.
<unk> advertising, it's particularly national advertising I was just wondering if.
Given that you are in such strong growth markets.
Such a strong growth industry in digital and a lot of these other countries are you seeing any weakness or coming from any particular regions around the globe.
What we're seeing in the United States.
Okay.
Well I think the.
This inflationary conditions in the United States is worldwide and it certainly has.
Dampens people's ability to consume more spend more so.
Certainly I think the issues that we're facing here in the United States with a slowdown in consumer spending.
Is is prevalent throughout the world.
Alright, Gotcha is there any particular region that you're noticing that that that weakness.
Alright, I guess of a softening of the growth that youre seeing in digital.
No no not at this time I mean, we monitor.
All of our markets our territories as closely as we can and trying to get a good.
A good sense of where the market is headed.
But.
Right now, we're not seeing any I'll call it any weakness, but we'll continue to monitor it and let me I think.
The economic situation not only in the U S. But in the World is something that we will continue to change in.
To be more volatile than we would like.
And then my.
Last question, obviously, you have a pristine balance sheet lots of cash which is in a great position to be.
And especially if we are heading into recession. There are a lot of media companies out there that are very levered.
Yeah.
Okay.
Looks like at this point are you seeing anything that's now crossing your desk that may have.
So when the economy was looking pretty strong.
Just kind of like looking at the pipeline of opportunity is and then if you can just talk a little bit about where you're seeing the opportunities are they in the digital space or are they are they in other areas that you might consider.
Well I think you were dropping off a little bit Microsoft was having trouble.
Hearing all of your question, but but we spend a lot of time.
Analyzing the.
The opportunities in the digital space.
That's something that's kind of a constant that runs through to the company.
We continue to look at opportunities.
All parts of the world, particularly those opportunities that complement our current infrastructure that we've put in place.
Got you at this point you wouldn't be looking at media.
Traditional media like TV or radio or are other things of that nature of that nature.
Well I have to be something really compelling.
Once in a while things can run across our southern cross.
Our desk here.
On the traditional media side, and we look at it closely and we evaluate it and see if that's contributed to our growth and if we can't then we don't we move on but Thats. The same way and that's the same approach we use with our digital any digital opportunities as well, how well will it fit into the.
The current.
Our strategy of the company with regards to our digital assets, what's the culture like of the new company that we might be looking at.
When most importantly, what are the prospects for growth.
Gotcha, Alright, that's all I have thank you.
Thank you.
Our next question from the line of James Dix with industry capsule Research. Please go ahead.
Hey, gentlemen.
Couple questions.
And correct me, if I'm wrong over the past quarter, you had a couple.
Copper presentations, where I think the message was that you were still comfortable with the business outlook that you had going into the year.
Now that you've reported your second quarter results.
Would you speak to that again, I mean, do you still feel basically.
Similar level of comfort with your business outlook that you had going into the year.
We do James we we like what we see so far in the current quarter and then fourth quarter, obviously is still a long ways out, but we're still tracking to what we had budgeted.
As we begin at the end of last year.
Okay and would you have announced since then a few territorial expansions, which you you've talked about earlier on the call.
What results from there be incremental to that.
Okay.
Would they be incremental no probably not.
That's kind of potentially could serve as an offset if there is any perceived weakness with the core operations. So.
We're sticking with that number and not really adding anything incremental from those two new territories, Okay got it.
And I will add James just to what.
It takes a while to develop these countries it doesn't happen overnight. So it will be at least.
Six months two year process before we start to see some real real returns on all of our work.
Okay. Okay.
And then.
Your digital revenue I would say, maybe a little with a little bit below what I was expecting in the quarter. There I know previously.
You had mentioned a few headwinds you will you might have been seeing are there any headwinds that you would call out for digital that you saw in the second quarter.
Fannie headwinds.
No I mean, we still like what we're seeing maybe the meta business has the growth has subsided a little bit we are comping against tougher numbers deeper into the year last year. So that directionally is something that we're tracking but know otherwise.
And we like what we've seen.
Okay great.
And then one housekeeping thing as far as TV I think at the end of your pacing discussion you talked about pacing up 6%. Excluding the three affiliate changes you had at the end of last year.
I just want to be clear is that.
Our pacing for core advertising all revenue.
That includes political.
Okay, but is that an advertising only number or is that a revenue number it's an advertising only number but including political but not including trends, yes, okay great.
And then the.
Pace of the buyback was a little bit slower in the second quarter than the first anything any particular reason for that or was that just kind of the brakes of the windows and things like that.
Well you know what.
We're watching the market carefully we had a <unk> one in place with specific buying criteria.
Oftentimes that criteria was never hit we will look at tweaking that when the Windows open and seeing if we can make more progress on that front.
Okay.
And then.
The last one for me is are.
Are you seeing do you or do you think that this digital business is seeing any impact.
From the strong U S dollar.
In various markets.
I know you've indicated in the past that I think most of your media representation.
Contracts are denominated in dollars, but I still wonder about some of the advertisers just locally there.
Whether they are feeling any.
Any pressure from the strong dollar and whether that's flowing through at all to your partners and therefore do you where do you think that's really a non issue.
I think it's a non issue look it's something we're watching.
It's tough to say whether.
Thats really happening or not but right now I think it's safe to say, we continue to like what we see.
Okay, great. Thanks very much.
Thank you.
Thank you we have next question from the lineup Lisa Springer with singular research. Please go ahead.
Okay.
Hello, gentlemen, and Robert Maltbie filling in for Lisa Springer.
Couple of questions.
Firstly in light of the <unk>.
Headwinds experienced team.
Internet some days.
Notably Facebook.
Okay.
We now call them Snapchat Roku.
<unk> recently.
How long have you been able to navigate those extreme.
Headwinds.
What are your strategies you may you deploy to address the near future.
Versus that.
Secondly is there right.
Consideration or thought about.
Untethering, the lower growth assets, namely.
Radio or TV from the higher growth digital.
Okay assets businesses.
So in the foreign bubble, I, dunno tracker or a spin offs.
Thank you.
So.
Howard right.
Robert Robert Robert Thank you for your question.
There is no discussion here internally to two.
Divest or spin off any of our broadcast assets.
We as you May know we have been.
Certainly.
Executing those assets for us.
Great period of time, but we still see growth in the in the Latino market.
One of the most well I'll call it.
The dynamic.
Segments of our population you can see what's happening in.
And political we are seeing more political dollars than ever in our in our history.
A lot of Thats due to the growth of the Latino voter.
Electric which are more.
Both parties now are continuing to to invest more in so.
That's not in the plans as far as Ah.
Our our digital business.
We continued to provide looking.
Looking to provide a better service to our not only the platforms that we partner with but also.
Our advertisers and that means more training for our for our sales professionals more training for our advertising agencies and clients better data, we're working right now.
On a product, where we're going to provide to our to our advertisers and agencies that will give them a lot more data on on their campaigns.
Certainly going to look work use that data to help them better execute their campaigns and in the end. We think this will result in more sales for them, so that'll be a benefit to us as well.
Blocking and tackling.
Hello.
Do you have any further questions.
Robert.
Oh. Thank you. Thank you very much no further questions.
Thank you.
Thank you.
Our next question from the line of advert rally with E. F. Hutton. Please go ahead.
Hey, guys. Thank you for taking my question.
I heard that.
Core TV pacings were down 14% I was just wondering if you could maybe break that down between the national and local level for me.
Yes, the national and local are both pacing down 9%.
And then you've got political reversing all of that.
Okay got you.
Congrats on the close of the Jack Digital acquisition.
I'm wondering how material.
The effect of the acquisition will be on the financials going forward.
Yes, it will be negligible. This year, it's a small acquisition not material, but we do expect high growth out of that operation over time, we're excited about it but no need to.
Just to change your models at this point.
Okay, Alright, great. Thank you guys.
Thank you and welcome.
Yes.
Thank you.
Your next question from the line up Howard Rosencrans with value Advisory. Please go ahead.
Hi, Chris Hi, Walter.
Good to be back on your calls.
Good to have you back to hear your voice.
Do you.
I just wanted to get.
First clarification on that on that on that Pacings number you said it was minus 14% but that includes the.
The affiliates are locked in TV right that is correct and correct. Okay. So I believe you said pro forma it's plus 6% and that includes political and I guess political is probably crowding out core so we shouldnt.
So we probably shouldnt get into a deeper breakdown on that is that fair that's fair yes.
Getting crowded.
So my question is regarding digital so you said, so if I have it correctly.
So in the second quarter digital was up 34% and pro forma it was up 22% is that right.
Yes, I believe that's right you're looking for prior year numbers to reconcile the pro now not looking to reconcile.
22 Pro form. So then you said that Q3, the pacing is plus 24% so.
Just can you give us a ballpark of sort of what that's running pro forma.
No.
Yes that is basically that is what does not quite pro forma but the only acquisition that had yet to be tucked in at that point last year was 365 digital.
And Thats, a very small deal Howard so that percentage won't likely change on a pro forma basis.
Okay, So thats, certainly encouraging particularly that.
And then I'm going to go back to the tail of what I think was the.
The singular question.
If you addressed it I apologize so.
<unk>.
Basically social media is having a tough go.
Now.
In part.
I believe it reflects that.
One social media vehicle is eating the pie of another social media vehicle, but.
That's just my general perception.
Maybe there is maybe there is it just an industry wide slowing in social media I'm asking for your color in general on that but so with the slowing or is there a share change.
Is it just is the social media spend just getting spread out more and how do you or is it just the slowdown in social maybe I better ask that first.
Well I think it's a combination of factors I mean, if you look at the.
The reports that have come out recently from the Big Tech platforms. There it's a combination.
Our competition certainly and.
And.
Just I think just overall.
The economic condition that Theyre looking at.
As changing quarter to quarter.
I think those are the two biggest factors the macro.
The competition.
Okay. So it is both factors. So my question to you is on a global basis.
Yes.
Separately in the market you're competing in I guess, it's foremost.
Biggest market is.
If im not mistaken far and away the biggest market is Latin America.
And I know you have representation with meta.
I don't really know where your representation is meta vis vis the tech talk but.
Are those mediums.
Hi.
Losing share like they are in.
Again is it is it that there is a tick tock taking from.
From meta is.
Are you seeing the same sort of.
Conditions there.
So so you would see.
Based on your pro forma growth it doesn't seem like like you are being impacted as of yet.
So.
Is it not the same in those global markets.
I think a couple of things one of them.
We focus on emerging territories with a strong connected consumer base.
So.
Our markets that we operate in are maybe not as mature as.
The bigger markets that.
The platforms that will aware of operating.
Google etcetera, but.
So that might be part of it.
And that there's still more growth left in our markets, but certainly we're all fighting for the AD pie so its fears.
Okay and do you expect.
I don't know, if it's seasonality or or it's just continued <unk> growth.
<unk>.
I would assume to continue to drive.
I would assume to continue to drive your EBITDA on a quarter to quarter basis.
Higher because I assume your margin.
Your margin.
I figured it was about.
About 7% and in digital so I assume there is really going to be I doubt there some margin compression on the near horizon. So.
Fair to say that that should drive up there.
There should be some nice flow through and drive up the EBITDA Q to Q meaningfully.
Yes.
Digital margins were seven 3% Q2, we expect that to continue to ramp up Q4 is the peak quarter for digital so.
And sequentially yet revenue is expected here internally to continue to improve quarter by quarter for the balance of the year.
Okay.
Thank you very much and glad I'm back. Thank you. Thanks, Howard welcome back manager back to Howard. Thank you for your questions. So thank you again, everyone for joining us today on our second quarter call.
We look forward to sharing our progress with all of you in.
In the third quarter when we.
On our third quarter call in November when we will announce our third quarter earnings operator.
Thank you very much.
Ladies and gentlemen. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.
Okay.
Yeah.
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