Q2 2024 Gannett Co Inc Earnings Call
Gannett: Greetings and welcome to Gannett's second quarter 2024 earnings call.
Speaker Change: At this time all participants are in a listen only mode and a question and answer session will follow the formal presentation.
Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Speaker Change: Please note, this conference is being recorded.
Speaker Change: I will now turn the conference over to your host, Matt Esposito, Head of Investor Relations. Sir, you may begin.
Unknown Executive: Thank you. Good morning, everyone, and thank you for joining our call today to discuss Gannett's second quarter 2024 financial results. Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer, Doug Horne, Chief Financial Officer, Kristin Roberts, Chief Content Officer, and Chris Cho, President of Digital Marketing Solutions. If you navigate to the Gannett website, you will find that we have posted an earnings supplement in addition to our earlier press release. We will be referencing it today on the call as it provides you with additional detail on this quarter's performance.
Matt Esposito: Thank you. Good morning, everyone, and thank you for joining our call today to discuss Gannett's second quarter 2024 financial results.
Speaker Change: Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer, Doug Horne, Chief Financial Officer, Kristin Roberts, Chief Content Officer, and Chris Cho, President of Digital Marketing Solutions.
Speaker Change: If you navigate to the Gannett website, you will find that we have posted an earning supplement in addition to our earlier press release. We will be referencing it today on the call as it provides you with additional detail on this quarter's performance.
Speaker Change: Before we begin, please let me remind you this call is being recorded. In addition, certain statements made during the call are or may be deemed to be forward-looking statements, including those with respect to future results and events and are based upon current expectations.
Speaker Change: These statements involve risks and uncertainties that may cause actual results and events to differ materially from those discussed today.
Speaker Change: We encourage you to read the cautionary statement regarding forward-looking statements in the earnings supplement, as well as the risk factors described in Gannett's filings made with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to publicly update or correct any of the forward-looking statements made during this call.
Speaker Change: In addition, we will be discussing non-GAAP financial information during the call, including same-store revenues, free cash flow, adjusted EBITDA, adjusted EBITDA margin, and adjusted net income attributable to Gannett.
Speaker Change: You can find reconciliations of our non-GAAP measures to the most comparable U.S. GAAP measures in the Earnings Supplement.
Speaker Change: Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in Gannett.
Speaker Change: The webcast and audiocast are copyrighted material of Gannett.
Speaker Change: And may that be duplicated, reproduced,
Speaker Change: or re-broadcast it without our prior written consent. With that, I would like to turn the call over to Mike Reed, Gannett's Chairman and CEO .
Mike Reed: Thank you, Matt. Good morning and thanks for joining our second quarter earnings call.
Mike Reed: We had a strong quarter and we are excited to give you an update today. I wanted to start with some important themes, which you will hear covered throughout this morning's call.
Mike Reed: We continue to show improvement in our overall same-store revenue trends and are pleased with where we are for the first six months of the year. We saw increased engagement with our large digital audience, resulting in the third consecutive quarter of year-over-year growth in digital advertising, and we grew our partnership revenue more than 100% compared to the prior year. This performance is especially noteworthy given the 40% growth we experienced in the second quarter of last year.
Speaker Change: We continue to show improvement in our overall same-store revenue trends and are pleased with where we are for the first six months of the year.
Mike Reed: Importantly, our improvement in total same-store revenue trend was once again driven by growth across all of our key digital revenue categories as we expected.
Mike Reed: We realized adjusted EBITDA growth a quarter earlier than expected this year. And, we improved our balance sheet, moving first lien net leverage below 2x to 1.9x, while liquidity remained strong.
Mike Reed: Core to our operating results was our expanded monetization strategy, which produced several wins across our digital businesses during the quarter.
Mike Reed: So it was great to see further progress over a very tough comp.
Mike Reed: In Q2, we saw continued growth in each of our digital revenue categories versus the prior year, growing digital revenues, and further deleveraging. Our commitment to a diversified digital strategy is expected to provide a foundation for sustainable growth, with the goal of maximizing revenue throughout the user journey. In the second quarter, we continued to attract a significant digital audience with 185 million average monthly unique visitors to our platform. And as a result of improved engagement with that audience, we were able to achieve double-digit page view growth over the prior year.
Mike Reed: As a result, total digital revenues increased 6.2% and now account for 44% of total revenues.
Mike Reed: Our commitment to a diversified digital strategy is expected to provide a foundation for sustainable growth.
Mike Reed: In the second quarter, we continued to attract a significant digital audience with 185 million average monthly unique visitors to our platforms.
Mike Reed: This focus on overall audience and monetization has yielded positive results across our digital businesses.
Mike Reed: A notable example of that success is our digital-only subscription revenue, focused on customer acquisition, content, and pricing. These have proven to be effective. We expect this revenue stream to continue to be a meaningful contributor to the expected overall digital revenue growth in the near and long term. I'll now turn it over to Kristin to highlight some of the accomplishments from the quarter, as well as outline the strategic initiatives in motion for the second half of the year.
Mike Reed: A notable example of that success is our digital-only subscription revenue.
Mike Reed: The second quarter also marked the fourth consecutive quarter of sequential growth in digital only paid subscriptions, as well as a return to year-over-year growth.
Mike Reed: Our penetration rates remain low and our ARPU is below market, so we see significant potential to grow through increased volumes and pricing.
Kristin Roberts: Couple that with the outstanding work Kristin and the content team are doing to provide high quality journalism and broader content experiences and we believe we have a strong value proposition for our consumers and advertisers.
Speaker Change: It was nine months ago that I outlined on this call our long-term vision for domestic Gannett media.
Speaker Change: We're using strong journalism to deliver content that's both relevant and essential. And that has expanded our audience, it's improved our engagement among readers, viewers, and listeners, and it's helped grow digital revenues through diversified channels.
Speaker Change: As a result, we've generated 11 consecutive months of at least 1 billion page views at USA Today and the USA Today Network.
Speaker Change: Based on unique visitors as measured by ComScore. Also, our digital audience represented 53% of the total internet audience as measured by ComScore, indicating that more Americans are engaging with our content than ever before.
Speaker Change: These milestones are monumental and I'm incredibly proud of our team's work.
Speaker Change: Looking to the second half of the year, we expect to continue to scale our success in video content. Our audiences tell us in so many ways.
Speaker Change: We're here to deliver.
Speaker Change: As I mentioned on our last call, we ramped up our video initiative through the creation of a unified video team that supports production and programming across all newsrooms and content teams.
Speaker Change: Our goals are to increase video views and engagement, and to extend the reach of our video journalism to millions of viewers. The best part is that we're already seeing incredible results, with significant gains made in video programming and video views from major sporting events.
Speaker Change: such as the Kentucky Derby, Indy 500, and the College World Series. These results make it clear we're benefiting from the power of sports video on our network.
Speaker Change: Now, with the Olympics underway and football season quickly approaching, we plan to expand this strategy both in our local markets and nationwide. By combining video efforts and better communicating and collaborating, we've set out to deliver essential content in a format our audiences increasingly want.
Kristin Roberts: We're also covering the 2024 elections with our One Team Unified strategy leading the charge. Voting isn't just about waking up on November the 5th and casting a vote on your way to work. It starts so much earlier with so much more at stake than the top of the ticket.
Speaker Change: Voting isn't just about waking up on November the 5th and casting a vote on your way to work. It starts so much sooner, with so much more at stake than the top of the ticket.
Kristin Roberts: Our mission is to help readers, viewers, and listeners become more informed and ready to make the best choice for their families and for themselves. We're delivering on this commitment by creating more explanatory journalism, leaning into local voter guides and helpful email courses, and redesigning results pages. Giving the people of our communities the information they need to fully participate at the local, state, and national level is the work that matters in an election year.
Speaker Change: Our mission is to help readers, viewers, and listeners become more informed and ready to make the best choice for their families and for themselves.
Speaker Change: We are delivering on this commitment by creating more explanatory journalism, leaning into local voter guides and helpful email courses, and redesigning results pages.
Speaker Change: Giving the people of our communities the information they need to fully participate at the local, state, and national level is the work that matters in an election year.
Speaker Change: To recap, we believe our results demonstrate that we are the preferred platform for relevant and essential content.
Speaker Change: I'd also like to take this opportunity to thank the content team and all of our partners throughout the enterprise for their outstanding work. None of these achievements would be possible without the incredible effort you put in every day. Back to you, Mike.
Mike Reed: Thank you, Kristin. It's really exciting to hear about several of the key initiatives underway, which we expect to have a tangible impact on audience and engagement, as well as revenue generation.
Speaker Change: Thank you, Mike. In the second quarter, our DMS business continued to deliver year-over-year revenue growth. We achieved our highest core platform revenue in the history of the segment, reaching $122.8 million, growing 1% over the prior year period.
Chris Cho: Revenue growth in the second quarter slowed slightly compared to DMS's strong first quarter and our original expectation to experience lower budget retention early in the quarter. However, we saw retention recover steadily over the quarter. We also remain focused on running our DMS business at high levels of profitability, and in Q2, our adjusted EBITDA of $11.8 million marked notable growth of 34.1% compared to Q1. Importantly, we successfully retained and expanded accounts that align with our ideal customer profile.
Mike Reed: Revenue growth in the second quarter slowed slightly compared to DMS' strong first quarter and our original expectations.
Mike Reed: So we experienced lower budget retention early in the quarter.
Mike Reed: However, we saw retention recover steadily over the quarter. With a solid pipeline of new business, we anticipate Q3 revenue growth to return to or exceed Q1 levels.
Mike Reed: We also remain focused on running our DMS business at high levels of profitability. And in Q2, our adjusted EBITDA of $11.8 million marked notable growth of 34.1% compared to Q1.
Mike Reed: We ended the quarter with over 14,700 customers, representing sequential growth of 2.8% versus Q1. Importantly, we successfully retained and expanded accounts that align with our ideal customer profile.
Mike Reed: Our core platform ARPU also reached a new high in Q2 of approximately $2,800, increasing 5.1% year over year.
Mike Reed: In the quarter, we grew our customer count, we grew our ARPU, and we believe this sets the foundation for growth in Q3.
Mike Reed: As I outlined on prior calls, we developed our AI-powered CRM solution, Customer Center Powered by Dash, or DASH, that complements and accentuates our existing DMS product suite.
Chris Cho: This solution leverages generative AI by offering state-of-the-art lead categorization and prioritization, as well as call and voicemail summarization features, which are expected to drive better campaign optimization and enhance commercial outcomes for customers. I look forward to updating you on further progress in Q3.
Mike Reed: Over the long term, we expect to make DASH available as a standalone offering to any customer. To date, we have seen encouraging traction with our new DMS customers including a subscription to our AI toolset as part of their overall purchase.
Chris Cho: It is encouraging to see our DMS businesses' product innovation during the quarter. The launch of Dash required a great deal of hard work, so congratulations on the positive reception.
Mike Reed: Thank you, Chris. It is encouraging to see our DMS businesses product innovation during the quarter. The launch of Dash required a great deal of hard work. So congratulations on the positive reception.
Speaker Change: As we continue our journey, I'm excited about the possibilities of this new revenue stream for our DMS business.
Speaker Change: We believe this strategic expansion will enable us to drive audience growth and engagement, increase our digital revenues, and enhance the monetization of our content platform.
Speaker Change: As we further scale our existing portfolio and announce new deals, we expect this affiliate revenue stream to become a significant contributor to our overall revenue.
Mike Reed: Before I turn the call to Doug, let me recap the second quarter. As you have heard, we've made significant strides across our business, a few of which are improving revenue trends. With that, I will now turn the call to Doug to provide additional detail and color around our 2024 second quarter financials.
Speaker Change: Before I turn the call to Doug, let me recap the second quarter.
Speaker Change: We believe our strong financial results and operational performance show that our strategy is working.
Doug Horne: As a result, we are confident and believe we are on track to deliver on our full year commitments.
Doug Horne: The first half of 2024 closed with considerable momentum, and as we move into the second half, our optimism at Gannett continues to grow.
Doug Horne: For Q2, total operating revenues were $639.8 million, a decrease of 4.8% or 4.6% on a same store basis.
Doug Horne: This represents a 50-basis point improvement from Q1 same-store revenue trends, as well as the sixth consecutive quarter of revenue trend improvement.
Doug Horne: While our digital advertising and DMS results were impacted by higher-than-expected churn, primarily in lower-margin accounts, we believe the growth in our digital-only subscription business
Doug Horne: Combined with the anticipated expansion in both digital advertising and DMS, which we believe are supported by strong new business pipelines, is expected to result in revenue trend improvement in the second half of the year. Adjusted EBITDA totaled $74.6 million in the second quarter, an increase of 4.8% or $3.4 million.
Doug Horne: Before moving on from revenue, I want to highlight that earlier this year we eliminated certain out-of-market and non-strategic USA Today Network Ventures events.
Doug Horne: Adjusted EBITDA margin was 11.7% in Q2 compared to 10.6% in the prior quarter.
Doug Horne: The growth and adjusted EBITDA was fueled by improving revenue trends, strategic cost controls, and continued operational progress against our goals. Additionally, each of our digital revenue categories continued to grow over the prior year, reflecting solid execution of our diversified digital strategy. Digital advertising increased 3.6% in Q2 due to programmatic revenue and page view growth, and we expect these trends to continue to improve in the second half of the year. Our strategic efforts to enhance the quality and value proposition of our print product continue to demonstrate results. As a result, we expect to carry this momentum into the second half of the year.
Doug Horne: Our digital-only subscription business continued to perform well in Q2, with growth across all key metrics.
Doug Horne: Digital Only Subscription Revenue reached a new high of $46.3 million, growing 22.3%.
Doug Horne: Importantly, we achieve these increases while also growing digital-only paid subscriptions sequentially as well as year over year.
Doug Horne: We recently implemented a new paywall strategy, which is expected to further improve our acquisition efforts. And as a result, we expect continued year-over-year growth in digital-only paid subscriptions for Q3.
Doug Horne: Our strategic efforts to enhance the quality and value proposition of our print product continue to demonstrate results. In Q2, print and commercial saw sequential improvement in revenue trends for the second consecutive quarter.
Doug Horne: We are committed to managing the print products and related secular declines as efficiently as possible, which is why we remain focused on improving the subscriber experience.
Doug Horne: As a result, we expect to carry this momentum into the back half of the year.
Doug Horne: Looking at the domestic Gannett media segment, in Q2, adjusted EBITDA in the segment was $52.9 million, up 19% compared to Q1. Adjusted EBITDA margins also saw sequential growth, increasing by 180 basis points to 10.8%. For Q2, adjusted EBITDA in the segment was $14.1 million, up 13.6% over the prior year, and adjusted EBITDA margins grew 150 basis points to 23.1%. Free cash flow reached $25.4 million in the second quarter, marking a sequential improvement of $15.9 million compared to Q1. We ended Q2 with approximately $1.1 billion of total debt. In Q2, we repaid $24.3 million of debt, which, combined with our adjusted EBITDA growth, reduced our first lien net leverage to 1.9 times.
Doug Horne: Looking at the domestic Gannett media segment, in Q2, adjusted EBITDA in the segment was $52.9 million, up 19% compared to Q1.
Doug Horne: Turning to NewsQuest, for Q2, adjusted EBITDA in the segment was $14.1 million, up 13.6% over the prior year, and adjusted EBITDA margins grew 150 basis points to 23.1%.
Doug Horne: Adjusted EBITDA for the segment was $11.8 million, reflecting a margin of 9.5%.
Doug Horne: We had approximately 14,700 core platform customers with core platform ARPU reaching approximately $2,800, which is up 5.1% over the prior year.
Doug Horne: Our customer budget retention rates are above 95%, a bit lower than Q1, however, based on what we see in the business, as well as our strong pipeline, we expect trends to improve in the second half of the year.
Speaker Change: At the end of the second quarter, our cash balance stood at $98.9 million, and our outstanding total net debt fell below $1 billion for the first time since the acquisition of Legacy Gannett in 2019.
Speaker Change: Cash provided by operating activities totaled $35.1 million, marking a sequential improvement of $12.6 million compared to Q1.
Doug Horne: Free cash flow reached $25.4 million in the second quarter, marking a sequential improvement of $15.9 million compared to Q1.
Speaker Change: We ended Q2 with approximately 1.1 billion dollars of total debt.
Speaker Change: Debt pay down remains a high priority and we continue to make meaningful progress.
Speaker Change: Our unwavering focus is on sustaining or improving these operating trends throughout 2024 as we continue to transform Gannett, and in turn, seek to create meaningful value for our stakeholders.
Operator: Thank you. At this time, we will be conducting our question and answer session. If you would like to remove your question, please press star 2. One moment, please, while we poll for questions. Thank you.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
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Speaker Change: Of course, and then this first question, you know, you continue to show great audience growth numbers. And while the traditional media industry is showing declines, I'm curious if this is sustainable for you. And how do you leverage the massive audience that the Gannett platform has?
Unknown Executive: Kristin, will you take this one?
Speaker Change: Kristin, will you take this one?
Kristin Roberts: Yeah, I'd be happy to. And really, thank you for this question. It's the right question. We at this point, we reach a massive number of people every day. And what the data tells us around some specific content types and some specific experiences is that there is room to grow.
Kristin Roberts: What this large audience really means for Gannett is that we've now got the opportunity to focus on engagement, and that engagement is what leads to diversified digital revenue. You know, it's one thing to grow the audience; it's another to hold that audience and then turn that audience into predictable and repeatable revenue across multiple revenue channels. So, moving from just programmatic revenue to programmatic revenue and direct ad sales, as well as affiliate revenue and partnership revenue, e-commerce, and subscriptions.
Kristin Roberts: What this large audience really means for Gannett is that we've now got the opportunity to focus on engagement.
Kristin Roberts: and
Kristin Roberts: That engagement is what leads to diversified digital revenue. It's one thing to grow the audience, it's another to hold that audience and then to turn that audience into predictable and repeatable revenue.
Kristin Roberts: across multiple revenue channels. So moving from just programmatic revenue to programmatic revenue and direct ad sales, as well as affiliate revenue and partnership revenue and e commerce and subscriptions.
Kristin Roberts: So an increasingly engaged audience really gives us the opportunity to take the next big step, which is
Kristin Roberts: creating a multi-point monetization journey, the kind of journey that increases the amount of revenue captured per digital user on every digital visit. And I think, you know, the useful constructs, the one that we're using to think about this, is the sports reader.
Kristin Roberts: Think about a sports reader who finds a story on platform, and then that leads to programmatic revenue. That person is then presented with a second relevant and related piece of content, and he or she interacts with that content, and say it's from our partner, Gambling.com. That drives partnership revenue.
Kristin Roberts: That's going to lead to increased engagement, and that, in turn, allows us to take advantage of our diverse digital revenue streams, and that will maximize monetization along the consumer journey. So we absolutely believe we can grow that engagement and that monetization, and we're starting to leverage AI in new ways to make smarter recommendations to personalize the consumer's journey. And we're building new experiences to take advantage of the content that we're already producing, and we're driving more engagement than we were this time last year. But there's still an incredible opportunity to draw our consumers back to our platform and to encourage further engagement with our content.
Kristin Roberts: smarter recommendations to personalize the consumer's journey. And we're building up new experiences to take advantage of the content that we're already producing, and we're driving more engagement than we were this time last year. There's still incredible opportunity to draw our consumers back to our platform, and to encourage further engagement with our content.
Unknown Executive: Yeah, thank you, Kristin.
Doug Horne: Can you please update your thoughts further about debt repayment and sales of non-strategic assets in the second half of the year?
Kristin Roberts: Thank you, Kristin.
Speaker Change: Can you update your thoughts about debt repayment and sales of non-strategic assets in the second half of the year?
Doug Horne: Yeah, absolutely. Debt repayment remains a top priority for us, and I would say each quarter, we're making measurable progress. And for the year, we're still targeting that $45 to $50 million of asset sales. And as such, we expect to repay at least $110 million of debt for the year.
Speaker Change: Yeah, absolutely. Debt repayment remains a top priority for us.
Kristin Roberts: And I would say each quarter, we're making measurable progress. And for the year, we're still targeting that $45 to $50 million of asset sales. And as such, we expect to repay at least $110 million of debt for the year.
Kristin Roberts: Thus far through, you know, the first half, we've repaid $41 million, but we expect that to accelerate in the second half.
Kristin Roberts: As we see more, you know, real estate and non-strategic asset sales, as well as continued free cash flow generation. I would say we have a really active pipeline in terms of asset sales.
Kristin Roberts: And we're expecting much more activity in Q3 and Q4 than what we've seen year-to-date.
Doug Horne: But, part two of that is volume, and that's, that's a really critical part of our growth strategy. Our penetration rates are still low.
Kristian: But the part two of that is volume and that's that's a really critical part of our growth strategy. Our penetration rates are still low and so all of the things you just heard kristian talking about are being done in a manner that that monetize the journey of a consumer with us and are part of that is subscription and so as we continue to.
Doug Horne: And so all of the things you just heard Kristin talking about are being done in a manner that monetizes the journey of a consumer with us, and a part of that is subscription. And so as we continue to leverage data and AI technology, as Kristin mentioned, to more personalize the experience, we expect to be able to accelerate the growth of the actual number of digital subscribers. So that, combined with the ARPU opportunity we have, gives us a ton of confidence that there's a long ways to go in this revenue category.
Kristian: For the first time since we acquired <unk> back in 2019 so.
Speaker Change: So through them through the midpoint of the year everything is on track and gives us a lot of confidence about delivering our full year numbers.
Speaker Change: That's very helpful and then.
Speaker Change: Just looking at you go around the industry Theres several eight new AI search engine platforms that are announced just this week and I'm curious how you feel about this development and any opportunities that you know.
Speaker Change: Or you could potentially leverage your contract with someone who they are.
James: Sure James.
Doug Horne: Yeah, absolutely. I mean, from a Gannett perspective, we remain very focused on ensuring that we get proper compensation for our content. And, you know, I think it's pretty evident that an AI search engine needs fresh, relevant, high-quality content, which we produce at scale. And that's really necessary to not only kind of produce the product, but importantly, maintain that product.
Speaker Change: Yeah, absolutely I mean, I would say from a GAAP perspective, we remained very focused on ensuring that we get proper compensation for our content.
Speaker Change: And I think it's it's pretty evident that our AI search engine needs fresh relevant and high quality content, which we produce at scale.
Doug Horne: And Giuliano, I would add, I think, you know, as some of these search engines, AI search engines appear now as business models, you know, versus just large language models that were trained on older material, including our content illegally. But as new search engines emerge as a business model, that makes our content even more attractive to those businesses because they have to stay current, they have to be relevant, they have to be current.
Doug Horne: And you heard earlier on our call today, we're reaching 53% of the audience in the US that's on the internet. So what we're producing has real value for more than half the country. And so I think our content just becomes that much more valuable as search engine AI platforms emerge, and that that will give us a real opportunity to turn this into a licensing revenue stream going forward, in our view.
Doug Horne: That's very helpful. And then, you know, I'd be curious, maybe going back to a couple of questions, but, you know, I'm curious, what gives you the confidence that you'll get to your year-end goals for revenue at this point in the year?
Doug Horne: Yeah, there are a few things. You know, one is our digital subscription business that I talked about. We're generating 20 plus percent of revenue today, and our digital subs are starting to grow again, not only sequentially but year over year. And so, as we continue to grow both ARPU and the number of subscribers, we have a lot of confidence that our digital subscription business continues to accelerate in the second half of the year.
Doug Horne: Then I would turn to both the digital advertising and the DMS categories. And we have strong new business pipelines in both of those categories. In fact, on the media side, our pipeline is the largest it's ever been.
Doug Horne: And so that's really good to see. As we close that business in the third quarter, we'll start to really see digital advertising revenue pick up both in Q3 and Q4. And the same goes for DMS.
Speaker Change: And same goes for Dms as we grow our customer pipeline the budgets that those customers placed with us.
Doug Horne: As we grow our customer pipeline, the budgets that those customers place with us, and focus on solid utilization, we'll be able to accelerate DMS revenues as well. And then there's some focus on audience expansion and increased engagement that you heard from Kristin. Those strategic initiatives will help us grow programmatic digital advertising as well. We're really excited about the strategic initiatives we outlined today around sports and video. We have the elections in the back half of the year, which will have real positive impacts on audience and engagement, and therefore revenue.
Speaker Change: Focus on solid utilization will be able to accelerate the dms revenues as well. So so there's and then there's some focus on audience expansion and increased engagement that you heard from Christian those strategic initiatives will help us grow programmatic digital advertising as well.
Speaker Change: We're really excited about the strategic initiatives, we outlined today around sports video, we have the elections the back half of the year, which will have a real positive impact on audience and engagement and therefore revenues. So there's a there's a lot of needles that will move revenue.
Doug Horne: So there's a lot of needles that will move revenue, and combined that with the very strong pipelines our sales teams have combined, gives us a lot of confidence in accelerating the growth numbers for both digital advertising and DMS. And then, you know, Doug mentioned this too, but it really plays into giving us additional confidence that the back half of the year will get better because we have prioritized stabilizing print as best we can.
Speaker Change: And combine that with the very strong pipelines. Our sales teams have combined gives us a lot of confidence on accelerating the growth.
Speaker Change: The growth numbers for both digital advertising and Dms.
Doug Horne: We do understand that that's a declining revenue category for us, but it's profitable, and with some focus on the stabilization there, on customer service, on the quality of the content, those things. We're actually seeing, as Doug mentioned, two consecutive quarters of improvement in trend. We don't expect that to turn into a growth engine for sure, as Doug mentioned, but just some slight stabilization in the print trends allows more of that digital growth to drop to overall revenue growth. I feel really good, not only about where we are, but all the plans we have in place to deliver the full year results that we outlined back in February.
Doug Horne: Yeah, a couple small updates since our first quarter earnings follow-up. Number one, the Google trial with DLJ is slated to start in September. There's been no change in that, so it's good to see that we're just five, six weeks away from that going to trial. Second, a summary judgment that Google filed for to have it dismissed was denied, so the trial is going forward. And then the third thing is that the witness list has been released by the DLJ, and the DLJ's witness list is an incredibly strong list of witnesses, and our lawyers felt even stronger about our case when they saw the DLJ's witness list. So those are kind of the developments that have occurred since last quarter.
Operator: Thank you. Our next question is coming from Matt Condon with Citizens JMP. Your line is live.
Speaker Change: See that were just so you know five six weeks away from that go into trial second a summary judgment that Google had filed for to have it dismissed was was was denied so the trial is going forward in and then the third thing is that the witness list has been released by the Doj and the <unk>.
Speaker Change: L. J S. Witness list is an incredibly strong list of of witnesses and you know our our lawyers felt even stronger about you know our case when they saw the Doj's witness list. So.
Speaker Change: Those are those are kind of the developments that.
Speaker Change: That have occurred since last quarter things are staying on track from a timing perspective, and you know I think the Doj and ourselves feel really good about our positions.
Speaker Change: That's very helpful. Thank you.
Speaker Change: Ill jump back in the queue.
Speaker Change: Yeah.
Speaker Change: Banking or.
Speaker Change: Our next question is coming from Matt Condon with citizens JMP your line of sight.
Matt: Hi, Matt.
Unknown Executive: Hi guys, thank you for taking my question. Maybe my first one is just about the DMS business. I know you guys talked about some churn, maybe in some lower-margin accounts that you saw in the quarter and that improved throughout the quarter, maybe into 3Q here, but can you give any more color just on the line of sight of the acceleration of that business? And then maybe just, you know, more on the DMS business.
Chris Cho: Nice to see the AI products, the AI CRM tool, and the gaming tracks. What other products do you guys feel like you can launch here that could be some sort of product catalyst going forward? Outside of building a strong pipeline, which we are doing and have done to some degree, as Mike mentioned, and a lot of that momentum we're carrying into the third quarter, we've been very proactive and taking steps to improve churn across our portfolio. We know that accounts that buy more than one product from us, whether it's within our DMS portfolio or across our digital media portfolio, they just experience better results and stay with us longer.
Speaker Change: By Dash, which is our AI powered product or other reporting capabilities, we're making the upgrades to the performance analytics and reporting features our clients want and are receiving.
Speaker Change: And as I mentioned for Dms, we saw our retention improve through Q2 and we feel.
Speaker Change: Confident that we're taking the right steps to stabilize the churn.
Speaker Change: And I think.
Matt: Matt on the.
Speaker Change: And Chris can give you more specifics, but probably the next developments from a product perspective, our around dash dash is capable of doing a few things today, but theres more in the pipeline you can give a couple of specifics but.
Chris Cho: That's really where the next iteration of product development will come, more add-on features to Dash. That's right.
Speaker Change: But thats really where the next iteration product development will come as there's more add on the add on features to dash right. Yes. In addition to the digital marketing solutions that we provide the software the AI powered software offering is really going to close the feedback loop.
Speaker Change: Make the digital marketing solutions set more holistic and wholesome.
Speaker Change: And.
Speaker Change: It's going to provide.
Chris Cho: More commercial outcomes, more benefits to campaign optimization, and the solutions working together will yield so many more benefits to our customers and to Gannett.
Unknown Executive: Yeah, Matt, we haven't, and you kind of heard our audience numbers this morning. You know, we haven't really seen any, any real impact from, you know, the changes Google has made to different search and to algorithms. I know Google is trying to get, you know, more of a fullsome response on their own platform. And they've, they've tried to move maybe some advertisers that are paying them more up, up in the search.
Unknown Executive: But, you know, overall, our audience numbers continue to perk along, as you heard this morning, about 185 million unique visitors in the quarter. Each month, we were the largest traditional media company in terms of internet audience in July across the country, and we're reaching 53% of US adults on the internet.
Unknown Executive: as it kind of changes the dynamic of how people are willing to maybe view content across the Internet. Thank you.
Unknown Executive: Yeah, you know, it's a great question, and there's probably not anybody that has the perfect answer there.
Unknown Executive: Because we don't really know what the future holds. I would say, though, that, you know, we want to be part of the solution rather than part of the problem. And so we are anxious to engage in conversations with multiple AI platform companies. We think it can be mutually beneficial to them and to us, as some of these AI platforms graduate more to search, as we're seeing now, that gives us that makes our content that much more relevant. I think maybe maybe the key that puts us in a better position to create, you know, a valuable deal for both us and the AI company. I think maybe that's the heart of your question.
Unknown Executive: I think we'll get there. I think it's just a matter of time. You know, we're not the first to the party, but I think we'll get there. And, and so I'm optimistic that, you know, we'll strike some good deals, and they'll be mutually beneficial to us and our AI partners. And, and they'll help us, they'll enhance our business, not be detrimental to our business.
Speaker Change: It will get there and then so I'm I'm optimistic that.
Speaker Change: We'll we'll strike some good deals and there'll be mutually beneficial to us and our partners.
Speaker Change: And then they'll they'll help us still enhance our business not be detrimental to our business.
Speaker Change: Thank you so much.
Matt: Thanks, Matt.
Matt: Thank you.
Matt: As we have reached the end of our question and answer session. I will now turn the call back over to Mr. Reed for any closing comments.
Unknown Executive: Yeah, thank
Unknown Executive: Yeah, thank you. Thanks, everybody, for joining us this morning.
Mr. Reed: Yes, Thank you and thanks, everybody for joining this morning, I just wanted to wrap up.
Mike Reed: I just wanted to wrap up with a couple thoughts. I want to reiterate the strong performance we saw in the second quarter and, you know, and then how we are on track and expect to accomplish our four-year objectives. I think that's an important point. I'd also, when you have time, I'd ask you to go to our supplement posted on our website, pages four to ten, which I think give you a really good overview of our strategy and also the specifics of our performance as it plays into that strategy. I think they're just right; they tell the story very well.
Mr. Reed: With a couple thoughts I want to reiterate.
Matt: The strong performance we saw in the second quarter and then you know and then how we how we are on track and expect to accomplish our full year objectives I think that's an important point.
Matt: I'd also when you have time I'd I'd ask you to go to our supplement posted on our website pages four to 10, I think give you a really good overview of our strategy and also the specifics of our performance as it plays into that strategy I think they're just they tell the story very well.
Mike Reed: We realized digital revenue growth across all key digital revenue categories again this quarter. And as a result of that, total digital revenues now stand at 44% of total revenues. We're getting there through digital revenue growth, importantly, rather than just simply a free fall of print. I think that's a really important point.
Mike Reed: We achieved new highs in digital-only subscription revenue, digital-only subscription ARPU, DMS core platform revenue, and core platform ARPU. So we're at all-time highs in these areas. And as I mentioned, our pipelines are strong, which is great to see. We have an increasingly engaged and large-scale audience with 185 million average monthly unique visitors.
Speaker Change: With a solid liquidity position with nearly $100 million of cash on the balance sheet. As we ended the quarter. So so really really good momentum heading into the back half of the year.
Speaker Change: I'd also like to take this opportunity to thank the entire team for their passion their commitment and their dedication the execution on our strategy.
Speaker Change: No the team feels good that they are seeing some of these results now because we've been putting some of these plans and processes and strategies in place for a couple of years now and they are really coming to fruition. So really really confident and expect to have great success in the back half of the year. Thank you everybody for the support and for their time on the call. This morning and look forward.
Mr. Reed: The update new updating you again next quarter. Thank you.
Speaker Change: Thank you.
Speaker Change: This concludes today's call and you may disconnect your lines at this time and we thank you for your participation.