Q4 2024 Townsquare Media Inc Earnings Call
and Bill Wilson. Thank you.
Speaker Change: Good morning and welcome to Townsquare Media's Fort Quarter 2024 Conference Call.
Speaker Change: As a reminder, today's call is being recorded and your participation implies consent to such recording.
At this time, all participants are in a listen-only mode [inaudible]
Speaker Change: Our brief question and answers session will follow the formal presentations.
If anyone should require operator assistance during the conference.
These press are star zero on your telephone keypad. [inaudible]
Speaker Change: With that, I would like to introduce the first speaker for today's call, Claire Yenicay, Executive Vice President, please go ahead.
Speaker Change: Thank you operator and good morning to everyone. Thank you for joining us today for Townsquare's fourth quarter and year end financial update. With me on the call today are Bill Wilson, our CEO , Stuart Rosenstein, our CFO and Executive Vice President.
Speaker Change: Please note that during this call, we may make statements that provide information other than historical information, including statements relating to the company's future expectations, plans and prospects. Thank you very much.
Speaker Change: These statements are considered forward-looking statements under the safe harbor provision of the private security's litigation reform act of 1995 and are subject to risk and uncertainties that could cause actual results to differ materially from these statements.
Speaker Change: These statements reflect the company's beliefs based on current conditions that are subject to certain risks and uncertainties, including those that are detailed in the company's annual report on Form 10K filed with the SEC.
Speaker Change: During this call, we will discuss segment profit, which we previously referred to as adjusted in operating income by segment. We may also discuss certain non-gas financial measures, including adjusted EBITDA.
Speaker Change: Such non-governmental measures should be used in conjunction with all the information contained in the quarterly year end and current reports available on our website.
Speaker Change: I would also encourage all participants to go to our corporate website and download our investor presentation as Bill will reference some of those slides during our discussion this morning. In addition, our annual shareholder letter is now available on our website. At this time, I would like to turn the call over to Bill Wilson.
Bill Wilson: Thank you, Claire, and thank you all for joining us this morning. It's great to reconnect with everyone. We're very pleased to share with you that Townsquare's fourth quarter results met our previously issued guidance and that our full year results met the guidance that we issued at the start of 2024.
Bill Wilson: And as always, our differentiated strategy and business model generated meaningful cash flow consistently throughout the year.
Bill Wilson: We ended 2024 with $33 million cash on our balance sheet and generated $49 million of cash from operations in 2024.
Bill Wilson: Importantly, we also completed a successful refinancing of our debt last month, extending
Bill Wilson: I am extremely proud of the Townsquare team's performance over the past several years. In essence, we have continuously executed on our differentiated digital first strategy and delivered on what we said we would do, while simultaneously building value for our shareholders through debt reduction and share repurchase while also paying a high yielding dividend.
Bill Wilson: We delivered solid and consistent results in 2024 as we built momentum throughout the year. Driven in part due to the pickup and political advertising in our presidential election year, but also importantly due to the sequential improvement in both of our two digital business
Bill Wilson: By now, it should be very clear that Townsquare's digital platform sets us apart from others in local media .
Bill Wilson: As highlighted on slide 12 in 2024, digital revenue contributed 52% of our total net revenue more than two times the industry average.
and Digital Contribute is 50% of our total segment profit.
Bill Wilson: Digital is and digital will continue to be Townsquare's growth engine and the area where we focus the bulk of our investment capital going forward consistent with our strategy of being a digital first local media company .
Bill Wilson: Let's dive into our two digital divisions results, starting with the fastest growing business for Townsquare, which is Ignite, our digital advertising business.
Bill Wilson: In 2024, Townsquare's digital advertising net revenue increased plus 5.5% year-over-year to $159 million and grew to 35% of our total companies net revenue.
Bill Wilson: Our digital advertising segment is composed of our own and operated portfolio of local and national websites and mobile apps and our programmatic business, which contribute approximately 40% and 60% respectively of the segment's revenue.
Bill Wilson: The success of our O&O digital business is due to our focus on super-serving our communities with high-quality, paper-local content, which has allowed us to build a large and at-scale and engaged digital audience of over 70 million monthly Yenic visitors to our owned and operated websites and mobile apps.
Bill Wilson: With the deep skill set of our digital product and engineering team, we have developed a multitude of digital advertising solutions for our clients, bringing national scale and sophistication to our size markets.
Bill Wilson: including high impact solutions that are not available on programmatic exchanges such as site takeovers, first impression full site coverage, mobile interstitials, sponsored social mentions and endorsements, etc. etc. etc.
Bill Wilson: In addition, we have the unique ability to collect and analyze first party data from our digital audience
Bill Wilson: allowing us to provide detailed and unique insights about consumer behaviors, audience interests, and purchase intent that drive real results with strong ROI for our clients, giving us a true strategic advantage over our local competition.
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Speaker Change: As a result of the strength of our local, original, content and brands, combined with this powerful first-party data, we are confident that our own and operated digital advertising business will continue to be a growth driver for our company moving forward.
Speaker Change: That being said, we are most excited about our digital programmatic business, which has been and will continue to be the largest growth driver for our company for the foreseeable future.
Speaker Change: Particularly when factoring in the potential of the third party, media partnership model that we launched in 2024.
Speaker Change: Our digital advertising programmatic platform provides our customers with precise targeted solutions giving them the ability to reach a high percentage of their online audience across desktop, mobile, connected TV, e-mail, paid search and social media platforms utilizing display, video and native executions.
Speaker Change: We essentially act as a full service digital agency for our clients.
Speaker Change: from design and creative services to buying inventory, optimizing a campaign and providing real-time reporting and analytics and insights, therefore providing a level of service that is often not available in the markets that we operate in.
In addition,
Speaker Change: We are simply able to offer more cost-effective campaigns to our clients than most of our competitors.
Given our scale across our 74 market footprint.
Speaker Change: and our in-house proprietary demand-side trading desk that is integrated with more than 15 digital advertising buying platforms with access to all major advertising exchanges and therefore more than 250 billion impressions per day.
Speaker Change: Evener, own momentum and success in the digital programmatic advertising space, we elected to explore an additional avenue of growth which capitalizes on the knowledge, expertise
Speaker Change: White labeling our digital programmatic advertising solutions to others in local media.
Speaker Change: In 2024, we created the Media Partnership Division and we have since announced strategic partnerships with great companies like Summit Media and Steel City Media who operate local media properties across 11 combined markets.
Speaker Change: While this is currently a modicized opportunity in the context of our overall digital advertising division for 2025 for our entire digital advertising division for 2025.
Speaker Change: We are very excited about what these and other potential partnerships represent, which we believe is the opportunity to become the chosen provider of digital program advertising to broadcasters and digital agencies and others in local media and cities outside of the top 50.
Speaker Change: While early, we believe this media partnership initiative has the potential to be a significant difference maker and revenue and profit growth driver in 2026 and beyond, as we currently in discussions with numerous other partners in local media about potentially partnering with us to be the programmatic digital advertising solution.
Speaker Change: SMP Global Market Intelligence latest forecasts projected digital advertising in the United States will increase at a plus 8.9% Kager through 2029.
Speaker Change: We are confident that these favorable industry turns together with our in-house suite of marketing solutions, third-party media partnerships platform, investment in our original content strategy, and our first-party data advantage will continue to drive strong digital advertising growth during the same period.
Throughout 2024, our Digital Advertising Business Game Momentum
Speaker Change: As first half, digital advertising revenue growth was plus 1% in 2024, which grew to plus 5% in Q3 2024, and accelerated in Q4 2024 to a very strong plus 15.5% revenue growth.
Speaker Change: Looking to Q1 of 2025, we expect strength and digital advertising revenue will continue with year-over-year growth rates in the high single digits.
Speaker Change: This growth will be driven by very strong growth rates and programmatic digital advertising revenue
Speaker Change: Let's now turn to our second digital business, which is our subscription-based digital marketing solution SaaS business, Townsquare Interactive.
Speaker Change: One of the biggest accomplishments in 2024 was achieving a turnaround at Townsquare Interactive Due to both internal and external factors which we have described at Ranked Out earlier calls and which have since been addressed we lost more than 7,000 subscribers from 2023 through Q1 of 2024
Speaker Change: At the start of 2024, we outlined our path to improvement, first when we returned to subscriber growth, then month-over-month revenue growth and eventually profit growth.
Speaker Change: I'm proud to say that we have hit these targets and then some. Within the first quarter of 2024 we had achieved subscriber and month over month revenue growth. And in Q4 of 2024 we proudly returned to year over year revenue growth.
Speaker Change: We are pleased to share that we expect Q1 2025 segment profit at Townsquare Interactive will increase on a year-over-year basis for the first time in two years and we expect strong year-over-year, whole year segment profit growth in 2025 for Townsquare Interactive of $2 to $3 million.
Speaker Change: We also launched the Business Management Platform, a stats-based or software as a service offering for Calisbury and Iraq to have been early 2024.
Speaker Change: This platform provides a suite of digital solutions which assists SMBs in identifying, converting, and communicating with their clients.
Speaker Change: Previously, Townsquare Interactive was positioned primarily as a web design and SEO company, which served us well for many years, and although these services are still part of our core offering today, we recognize it was time to evolve.
Speaker Change: Today, there are many SMBs who already have a strong web presence but need help in other areas, and our new business management platform can be sold to clients who already have an established website that they're happy with and or those who are ready to have dedicated resources to SEO.
Speaker Change: We believe that our new SaaS business management platform is a very powerful tool and will be a difference maker as we grow and continue to scale the Townsquare Interactive Business. We are not only helping SMB's with their digital presence, we are also helping them operate their business more effectively.
Speaker Change: In 2024, Townsquare Interactive's net revenue decline negative 8% is compared to prior year.
What is important to highlight?
Speaker Change: is that the Interactive's year-over-year growth rates improved each quarter in 2024.
Speaker Change: from negative 15% and Q1 to negative 13% and Q2 to negative 6% and Q3 and finally returning to revenue growth of plus 2% and Q4 2024.
Speaker Change: In addition, I am very proud of the fact that we manage expenses such as Townsquare Interactive Segment Profit Margin actually increased 10 basis points to 28.4%.
Speaker Change: and the revenue growth will continue in Q1 2025. We anticipate TSI will double Q4's revenue growth rate from plus 2% in Q4 to approximately plus 4% in Q1.
Speaker Change: And as I said earlier, we expect very strong year-over-year segment profit growth in Q1 for Town Square Interactive as well, with profit expected to increase approximately 20% and thus approximately $1 million in the first quarter of 2025.
Speaker Change: In the long term, we are confident that we have a long, sustainable runway ahead of us.
Speaker Change: With an addressable market of nearly 9 million target customers, as outlined on slide 15, we are only scratching the surface.
Speaker Change: With our existing subscriber base, superior product offering, including our new business management platform and a huge market opportunity I am competent, that Townsquare Interactive is on track and set up for long-term profitable growth and success.
Speaker Change: Thankfully, we strategically built a diverse product and service platform, and the strength of digital advertising all set the recovery last year at Townsquare Interactive.
Speaker Change: In total, our digital revenue grew plus 1% year-over-year to $234 million, and importantly generated $62 million of segment profit, representing a 27% profit margin.
A digital margin much higher than most in local media
Speaker Change: We believe Townsquare's ability to drive profitable, sustainable digital growth is a key differentiator for our company. Thus, I am happy to report that in Q4 of 2024, our total digital revenue grew approximately plus a little percent year over year.
Speaker Change: We view local radio as an extremely valuable asset with significant cash flow properties, unparallel consumer reach and an important local connection to our audience.
Speaker Change: However, radio is not a growth driver and in 2024 broadcast advertising net revenue declined negative 1% year over year and negative 6% year over year excluding political revenue.
Speaker Change: In fact, we take the view that broadcast is a mature cash cow business that will continue to decline going forward as businesses will continue to share shift from traditional advertising to digital advertising.
Speaker Change: Thankfully, we are often the beneficiary in that case, as we often have the most comprehensive set of digital advertising solutions available in our markets.
Speaker Change: It is our view that as broadcast revenue declines going forward, we will continue to generate a solid profit as we carefully manage expenses to maintain a strong broadcast profit margin.
Speaker Change: In 2024, despite broadcast revenue declines, our broadcast segment profit margins increased to approximately 30 percent due to both cost reductions and high margin political revenue.
Speaker Change: But even excluding political revenue, we also experienced an increase in broadcast profit margin in 2024.
Speaker Change: Because of the powerful combination of Townsquare's digital, plus radio, plus local investment, I believe that our flywheel will continue to blaze forward and gain momentum.
Speaker Change: And now, Sue will go through our results in even more detail, including providing details on our successful refinancing last month of our debt, as well as provided 2025 guidance for revenue and profit.
Sue: Thank you, Bill. Good morning, everyone. It's great to speak to you today. We're pleased to report that our fourth quarter results met a revenue and adjusted EBITDA guidance and that our full year results met the guidance that we set out at the beginning of the year.
Sue: Fourth Coordinate Revenue increased 2.6% year-over-year, $117.8 million. Above the midpoint of our guidance range of $114.8 to $118.8 million.
Sue: Full year net revenue declined 0.7% year-over-year before $451 million within our guidance set at the beginning of the year. In Q4, total political revenue was $7.2 million and for the full year, political revenue came in at $13.4 million.
Sue: Adjusted EBITDAW returned to growth in the fourth quarter with and without the impact of political fourth quarter adjusted EBITDAW increased 25.8% year-over-year to 31.2 million dollars which was within our guidance range of 30.8 to 31.8 million dollars
Sue: All year adjusted EBITDA was approximately 5, increasing 0.4% or just under $400,000 a year over the year for $100.4 million.
Sue: This was also within our guidance range that we set at the beginning of the year.
Sue: Townsquare Ignite, a digital advertising segment built momentum throughout the year and had a very strong end to 2024, as strength and programmatic advertising led to fourth-corded digital advertising net revenue growth of 15.5% year-over-year.
Sue: In total, all year digital advertising net revenues increased 5.5% year-over-year. As Bill also noted, we expect strong digital advertising revenue growth rates to continue in 2025 with Q1 digital advertising growth in the high single digits.
In 2024,
The digital advertising profit margin was approximately 26%
Sue: and we expect full-year margins to remain in the mid-20s for this business going forward.
Sue: Although there may be some variations from quarter to quarter, depending on the timing of investments, particularly the timing of new hires, as well as the ramping of new media partnership agreements.
Sue: Townsquare Interactive by Digital Subscription Marketing Solution Segment continue to demonstrate growth and recovery in the fourth quarter, just like it did had all year.
Sue: In fourth quarter, has expected Townsquare Interactive return to year-over-year revenue growth, with net revenue increasing 1.9% as compared to the prior year.
Sue: In the fourth quarter, Townsquare Interactive Segment Profit was close to flat year-over-year as profit declined by less than 1% or less than $50,000.
Sue: And as Bill mentioned, we have thrilled to share that we expect to return to very strong year-over-year segment profit growth in the first quarter of 2025, and for revenue growth rates to double from Q4s plus 2%, to approximately 4% in Q1 of 2025.
Sue: For the full year, outscore interactive net revenue decreased 8.4% as compared to the prior year, and profit decreased 7.9% year over year.
Sue: Declan and profit margins were strong at approximately 28% in 2024 despite our continued investment in the business.
Sue: In 2025, we're very confident that expectation that we will deliver both revenue and profit growth for our Townsquare Interactive Business.
Sue: Fourth-quarter broadcast advertising that revenue decreased 4.1% as compared to the prior year. In the fourth quarter, broadcast segment profit increased 26.4% year over year due to the impact of high margin political revenue.
Sue: For the full year, broadcast revenue declined 1.3% year-over-year, but broadcast segment profit increased 11.1% year-over-year, with margins that are approximately 30%.
Sue: In 2025, we anticipate margins will be slightly lower due to the loss of high margin political revenues, closer to the mid-twent.
Sue: Our fourth coordinate income was $25 million for a dollar and 42 cents per diluted share as compared to a net loss per diluted share of 14 cents in the prior period.
Sue: We'd like to remind you that any benefit or provision for income taxes included in the face of the income statement is for GAAP financial statement purposes only.
Sue: We maintain significant tax attributes, including approximately $96 million of federal NOL carrycords and other substantial tax shields related to the tax amortization of our intangible assets.
Sue: We continue to believe that will not be a material cash taxpayer until approximately 2020 -eight.
Speaker Change: As Bill highlighted, and I would again like to emphasize, we consistently have strong cash flow generation. We generated $28.2 million of cash flow from operations in the fourth quarter and $48.8 million in 2024 ending near with $33 million of cash.
Speaker Change: In 2024, we repurchased approximately $24 million worth of shares, or $2.3 million shares through our share-by-back program, including the repurchase of $1.5 million from the MSG shares and in a creative price on April 1st.
Speaker Change: In 2021, we have repurchased 16.6 million shares and an average price of $7.30 for share, while simultaneously reducing leverage over that period.
Speaker Change: In 2024, we also booked a fort back and retired $36 million of our bonds, including $12 million of bonds at or close to par in Q4.
Speaker Change: At the end of the year, our net leverage was 4.33 times the lowest leverage level since March of 2023.
Speaker Change: Last month we completed successful refinancing of our debt by entering into a $490 million credit agreement, including a $470 million term loan fee and a $20 million revolving credit facility, both due in 2030. This offering replaced our existing bonds that were due in February of 2026.
Speaker Change: By closing, we are approximately $480 million of debt, including the $470 million term loan, which has an interest rate of so far plus 500 basis points, and $10 million drawn on our revolver, which has an interest rate of so far plus 375 basis points.
Speaker Change: Assuming current so-called rates, this implies an annual interest expense of approximately forty-five million dollars.
Speaker Change: This represents an increase in our annual interest expense of approximately $9 million per year from 2024. However, this delta will decline as we pay down our debt and if and when there are interest rate reductions over the next several years.
Speaker Change: We will benefit from that as well. In addition, should Morphic conditions permit, we always have the opportunity to replace our term loan in the future.
Speaker Change: Overall, we are very pleased that our distinguished business model and successful digital strategy allowed us to successfully navigate a terminal market that was very wary of landers with the podcast assets given their experience over the past decade.
Speaker Change: As always, our number one priority is to invest in our local business to organic, internal investments that support our revenue and profit growth, particularly our digital growth engine.
Speaker Change: We plan to continue to invest in our digital product technology, sales, content, and support teams, specifically in our Townsquare Interactive and Townsquare at Night Businesses, maintain our strong competitive advantage in markets outside the top 50 cities.
Speaker Change: In addition, we plan to use our excess cash flow to reduce our debt to both mandatory and voluntary debt repayments and of course support a high yielding dividend.
Speaker Change: I'm pleased to share that due to confidence in our strategy and our consistent and strong cast generation, our board has approved an increase to our dividend.
Speaker Change: The raised dividend of 20 cents per share equates to 80 cents per share on an annualized basis, which is an increase of 1.3% year over year, and implies an annual payment of approximately $13 million based on a current share count and a dividend yield of approximately 10% based on a current share price.
Speaker Change: The higher dividend will be payable on May 1st for shareholders or records as of April 17th.
Speaker Change: We believe our strong cash flow characteristics will allow us to continue to invest in our business, support a newly increased dividend and allow us to de-lever going forwards.
Speaker Change: Turning now to a first quarter and full year of 2025 outlook.
Speaker Change: We expect first-order net revenue to be between $98 million and $100 million, which at the midpoint is approximately flat year-over-year excluding political.
Speaker Change: As previously detailed on this call, we expect Town Square Ignite, our digital advertising business, to be up in high single digits.
Speaker Change: As a reminder, in the first quarter, we typically have the lowest revenue of the year due to advertising sick locality, so our margins are typically lower in our advertising segments in the first quarter as a result.
Speaker Change: For the full year, we currently expect that a revenue will be between $435 million and $455 million.
Speaker Change: Embedded in this guidance is the loss of political revenue of $10 to $11 million, as we typically get between $2 and $3 million of political revenue in non-election years.
Speaker Change: As Bill outlined, we anticipate offsetting the loss of political revenue with growth in our digital business, including the return of year-over-year growth at Townsquare Interactive. We expect that a 2025 adjusted EBITDA will be between $90 and $98 million.
Bill Wilson: And with that, I will now turn the call back over to Bill [inaudible]
Bill Wilson: Thank you, Stu. And thanks to everyone for taking the time to be updated on Townsquare's Q4 and full-year results this morning. Greatly appreciate it. I want to conclude today's call by again highlighting some of the more relevant accomplishments we achieved with the Townsquare team's hard work in 2024.
Bill Wilson: Number one, 2024 net revenue and adjusted even a both met the guidance that we initiated at the start of the year.
Bill Wilson: Number two, we executed the successful turnaround of Townsquare Interactive, which is now supported by a more efficient and scalable business model.
Bill Wilson: 3. We expanded Townsquare Interactive's addressable charter customer base, through the introduction of a new SaaS offering, and we've also launched our Media Partnership Division of Townsquare Ignite, our digital advertising business, opening the door to grow third-party revenue screens outside of our market footprint.
Bill Wilson: Number four, approximately 52% of our companies totaled that revenue, and 50% of our total segment profit now come from our digital businesses.
Bill Wilson: Number five, we generated $49 million of operating cash flow in 2024 and efficiently repurchase both debt and equity while maintaining a high yielding dividend, therefore delivering attractive current returns to our shareholders.
Bill Wilson: And finally, number six, we refinance our outstanding debt, successfully navigating current loan lender market that has experienced bad outcomes in the radio industry over the past decade.
Speaker Change: In the words of Peter Drucker, the best way to predict the future is to create it.
As always,
Speaker Change: We are going to create our own opportunities, not wait for them to show up or present themselves. We create opportunities and overcome challenges. It's the Townsquare way.
Speaker Change: And given 2024, we are confident in our ability to continue to deliver attractive current returns to our shareholders in the form of a high yielding dividend, while also focusing on the financial health of the company by reducing our net debt levels through strong cash generation and debt reduction.
Speaker Change: And again, I'd like to take this opportunity to thank the entire Townsquare team for their passionate hard work each day in partnering and helping their clients and communities.
Speaker Change: With that, operator at this time, please open the line for any and all questions.
Speaker Change: Thank you and ladies and gentlemen we will now begin the question and answer session.
Speaker Change: To ask a question, you may press a star followed by the number one on your telephone keypad. To withdraw your question, you may press a star followed by the number two. Once again, if you would like to ask a question, please press a star one on your telephone keypad.
Speaker Change: And with that, our first question comes from the line up, Michael Kupinski with Noble Capital Market, please go ahead.
Thank you. Thanks for taking the question. Good morning.
Michael Kopinski: Congratulations, first of all, on your solid Q4. I have a couple of questions here. I was wondering if you could add a little bit more color on Townsquare Interactive. I may have missed this, but I was wondering if you provided the number of subscribers you ended Q4 with and where you see subscriptions headed in Q1 2025.
Speaker Change: Good morning, Michael, great to hear from you and thank you for dialing in.
Michael Kopinski: So in terms of interactive, as you just said, and we just noted in the conclusion of our prepared morse, couldn't be more proud of the turnaround that Townsquare Interactive
Michael Kopinski: As we said exactly a year ago, there would be three signs of a turnaround. One, subscriber growth, returning, then month over month revenue growth, and then year over year revenue growth and then profit growth. Really, really proud of the team ending the year with
Michael Kopinski: Revenue in Q1. Probably, most importantly, is we expect really strong profit growth in Q1. I think we've managed this business incredibly well for over a decade. We noted that profit growth in Q1, we expect to be up 20%, which would imply about a million dollars of incremental profit year over year in Q125 versus Q124.
Michael Kopinski: On a four-year basis, as you know, Michael, we traditionally generated two and a half to three million in profit on ...
Michael Kopinski: You're in and you're out and we expect this year to get back into that level on a full year profit basis. Thank you for your time.
Michael Kopinski: of $2.5 to $3 million. So things are, I'd say, you know...
Michael Kopinski: Close to firing on all cylinders, I think we shared that we brought in a new head of customer service from open table back last summer leading into the fall that individuals had an impact right away, but is still continuing to fine tune our offering on the service side and continues to make improvements so.
Michael Kopinski: really proud of the turnaround. I think most importantly, you know, we've talked at great length what transpires so I won't repeat all that but we lost the number of subscribers in 23 and then starting ending in Q1 of 24 and just feel very, very well positioned not only for this year but more importantly over the next 5 to 10 years. We believe we built a more scalable and efficient model and we also have this space offering which is really broadening our target audience. So just extremely bullish when we're thinking about [inaudible]
Michael Kopinski: The next three to five years of Townsquare Interactive. So I'll toss it back to you, Michael. Yeah. And as a whole, Bill, I know a bit in the past, Townsquare Interactive subscriptions roughly were $300 a month, and I was wondering if you kind of give us a sense of. [inaudible]
Michael Kopinski: What subscriptions are now that you have enhanced your products, offerings and interactive.
Michael Kopinski: Yes, so you are correct. Our Poo is roughly $300 per subscriber. That is continuing today. That is we have some offerings that go well over $400, but with the SaaS-based offering we are with this broadening of the target market that we're so excited about. There's great businesses that have a great website and don't need a new website, but we're helping them with our SaaS-based tools operate their business more effectively and efficiently as well as helping them
and Bill Nelson.
Michael Kopinski: At some point, could that raise? Definitely. But when I think about the next two years, I would assume a $300 arpooh going forward.
Speaker Change: Thank you for that, Bill, and one quick another question here.
Speaker Change: In the past, you provided some revenue goals, I guess, for Interactive and also for Ignite, and you largely teed that for Ignite. I was just wondering if you planned to update your three to five year outlook for in terms of revenues for Interactive and Ignite, much like you did in the past.
Speaker Change: for sure. We couldn't be more proud of it. I appreciate your comments at the beginning of your question. Q4 was just a great quarter and great momentum going into 2025. Having our digital advertising accelerate to almost 16%, it was 15.5% digital advertising growth was incredibly strong. We benefited from strong programmatic. We benefited from our own and operated properties. We talked that great length on prior earnings calls about the news desert.
Speaker Change: and the service that we're providing and filling the void of newspapers going away. So, again, with digital advertising, we're not only betting on the strength of programmatic, but importantly the strength of our own and operated. So, we expect our digital advertising to continue to operate in a high single digits in terms of revenue growth when you're looking at a three to five-year model. And then Townsquare Interactive, as I said on the profit side, I expect two and a half to three million this year. I expect not to be at the full ten million that historical...
of
and Robert Cole. Thank you for joining us.
Speaker Change: with the great attributes of radio. It's obviously the number one reach medium, tremendous cash flow. The fact that we generated 49 million dollars of cash flow for operations were incredibly proud of for 2024. But we do expect broad tests to continue to decline and that is in our five-year model. We've been saying this for many years and we've been able to moderate the expense base to have a very strong profit margin in the broadcast side. The great news for us and we continue to try to highlight it.
When people do stop...
Speaker Change: Advertising on Radio for whatever reason they're switching to digital advertising and when they're switching to digital advertising they're switching to us [inaudible]
Speaker Change: and that's one of the reasons you saw the explosive growth of digital advertising in Q4, 15.5%.
Speaker Change: also for us, which I think is unlike others given that fact that we have so many of our digital solutions built in house with our tremendous product and engineering and technology team that we couldn't be more proud of.
Speaker Change: that our margins on the digital advertising side are actually slightly higher than our broadcast expletical margins. So when somebody does decide to stop
Advertising on broadcasts if they do decide that.
Speaker Change: And they switched to our digital advertising solutions. We actually make more profit as an outcome. So I think if you look at the last three to five years, we've managed the broadcast decline quite well from an expense space.
Speaker Change: and then we're obviously our futures and digital advertising, digital marketing solutions and we continue to ramp that and we're really proud, as you just said, in
Speaker Change: Q4, Digital Overall, Digital Revenue increased 11%. So we go into 2025 with a lot of momentum and we're quite excited about the next three to five years. But I'll toss it back to you in case you have questions outside of interactive.
Speaker Change: One last question, and I promise. Obviously, we have a new administration in NFCC now looking at the regulations and lifting ownership caps and so forth. And I was just warning if you have some thoughts in terms of
Speaker Change: That Prospect in Radio and then whether or not given that that prospect whether you would be a buyer of radio I know that you just said that it's a mature business but it sounds like you get benefits in other ways. [inaudible]
Speaker Change: I was wondering if you would be interested in looking at M&A, you know, in that life.
Speaker Change: Yeah, no great question, Michael. Appreciate all the insights and perspective. So you are correct. If you go back for the last number of years, you've heard us talk about our perspective that deregulation is going to happen. It needs to happen. It's a must. The laws and regulations are antiquated and make no sense in today's media landscape is our view. So we've always taken the position. It's going to happen. It's just a matter of when with the new FCC chairperson. It's going to happen. [inaudible]
Speaker Change: We are extremely excited about the comments he's been making as recently as last week.
Speaker Change: particularly for markets outside the top 50. We're very consistent. We stick to our knitting. We've had many, many opportunities over the last 15 years to acquire assets broadcast assets in the top. [inaudible]
Speaker Change: 50 markets and we've always passed on that. It's served this well. I think it's one of the reasons we have had the success we have and diversifying our company into a digital first company with over 50% of our revenue and profit being in digital.
Speaker Change: So, I do believe the landscape will change. I do believe we're the natural choir of broadcast assets. When we talk about our last asset, I think on our last earning call, we talk about Cherry Creek. You know, in June of this year, that'll be coming up on three years. We bought Cherry Creek and we've doubled the cash flow in under three years.
Speaker Change: and that's because the broadcast business declined modestly and we grew the digital business so aggressively which is our Townsquare model and that proved true again with Cherry Creek just like it did with prior acquisitions.
Speaker Change: Top Line at a 20% profit margin, but more importantly, when you think about 27, 28, we believe this is a $50 million division to top line and 10 million profits to us.
Speaker Change: and there's a lot of conversations and partners that we're talking to. So we have two avenues. It's great to have choices. We could acquire assets and we've demonstrated every time we've acquired efforts, the ability to manage the cash flow of the broadcast business yet grow profit through our digital advertising and digital marketing solutions.
Speaker Change: which are quite exciting. But if we chose not to go that route, as we detailed, I think on a couple of our earnings calls in 2024, we can keep our capital. You didn't realize that to continue the deal average, which is a main priority for us over the next couple years.
Speaker Change: and sign up more media partnerships and still generate a 20% margin in our digital advertising partnerships with those companies. So...
Speaker Change: It's great to have choices. It's great to have multiple paths for digital growth, and that's what we have here at Townsquare. So thank you, Michael, for the questions. Appreciate it as always. Thank you, Bill. That's all I have, thanks.
You got it.
Patrick Shaw: Your next question comes from the line of Patrick Sholl, with Barrington Research Face. Go ahead.
All right. Good morning. I was curious within your guidance.
Patrick Shaw: I guess both of the first quarter may be to clarify it also for the full year. Are you expecting kind of an improvement in the trans and ex-political growth for radio?
Speaker Change: Good morning, Patrick. Always great to hear from you. So I would say taking a step back, again just a reiterator for the benefit of repetition. We believe our broadcast business is a mature cash cow business. We love the cash flowed characteristics. We love the fact that it reaches 50% of the adult population in our on average in our 74 markets. [inaudible]
Speaker Change: The fact that it helps us drive a tremendous audience to our own and operated 400 local websites and mobile apps. So I won't go through all of the tremendous attributes of our broadcast business. That said, we expect, and we've been saying this for many years now, that broadcast expolitical is going to decline. And when we talk about our guidance for 2025, we believe that decline will be in line with 2024. So in 2024, broadcast expolitical decline.
Speaker Change: 99.6% and that's what we expect for our full year 2025 as well as roughly in Q1 as well. What we're obviously, our growth engine for the company is and we'll continue to be our digital advertising and digital marketing solutions. So as I said, I think we did it on the call, but if not, we believe our digital advertising this year will grow in the high single digits.
Speaker Change: and then as I just noted on the Townsquare Interactive, I noted 2.5 to 3 million a profit and call it 5.5 to 6 million revenue for Townsquare Interactive. In Q1, we expect, as you can tell from our guide, in essence, ex-political revenue and the midpoint is roughly flat and we expect our digital revenue to be, could be approaching 55% of our total revenue. So, as we've said, when you take the long-term perspective and have a long-term view, we've
Speaker Change: from the company, we continue to manage the declining broadcast business.
Speaker Change: We continue to invest in our digital ignite advertising business or town square interactive business and when you think about two three four years out, we believe we believe we'll be 75 to 80% digital revenue and profit. So going back to your original question, Patrick, implied in the guidance is that broadcast will decline in line with last year's decline with roughly 6%. Could that moderate in the out years and be more low single digits?
Speaker Change: definitely a potential opportunity, but when you think about the last several years, um,
Weeb
Speaker Change: Always initiated guidance and provided guidance on the year of beginning call here in March.
Speaker Change: and we've always hit that guidance and we're quite proud of that and so we want to be realistic and conservative and that's what we think we are here with the guidance so could broadcast perform better this year it's definitely a possibility but in terms of our strategic plans we believe we're well situated even with a broadcast business that's in decline given the strength of our digital assets given the strength of our teams outside the top 50 cities so I'll turn it back to you Patrick for any follow up questions. Thank you so much for joining us and we'll see you in the next video.
Yeah, I'm going back to interactive event.
Speaker Change: I'm just kind of curious on how you manage that business now with increased uncertainty on the economic environment and I guess maybe the risk there of businesses kind of pulling back on some of their ...
Speaker Change: Yeah, just some of their spending is in a lot of it in response to like economic uncertainty and how you kind of manage that within both interactive and ignite.
Speaker Change: Totally get it. Great question. Listen, you know, when you're reading the headlines and you're following the media and you're hearing about old
Speaker Change: One one thing from the administration in the morning and maybe something slightly different in the afternoon it definitely creates a volatile environment, but that said, you know what?
Speaker Change: The advertising market overall is quite healthy, as we just said we're expecting high single digit growth rate in our digital advertising business and we're expecting to double the growth rate and interactive in Q1 versus Q4.
Speaker Change: So even with that quote unquote economic uncertainty, we are performing extremely well and I couldn't be more proud of the Townsquare team for doing so. So from going back to your original question, we're not seeing a negative impact.
Speaker Change: from that economic uncertainty. I think the challenges that we faced and overcame in Town Square Active were mostly self-inflicted. We noted that in great detail in 2023 and at the beginning of 24. Were there greater pressures because inflation was at 7, 8, 9 percent. Interest rates were much higher. Yes, it was definitely a more challenging time for particularly the businesses for Townsquare Active, because as we've been...
got a great length to explain.
Speaker Change: The target market is $9 million, $32 billion, but they're smaller companies that we target. So in those more tough times with that high inflation and interest rates, it was tougher. But that said, we truly believe those setbacks that we faced.
Speaker Change: over that 18 months were really self-inflicted, that if we would have performed at the level where capable we would have overcame those economic conditions, and that's what we're doing now, and we're quite proud of that, you know, having an expected growth of roughly a million dollars in profit in Q1 is phenomenal. We're just, you know, couldn't be more proud of that Town Square Interactive team, so we are navigating the economic uncertainty, but the market's healthy. I mean,
High single digit
Speaker Change: Digital advertising as we're sitting here, you know, almost the end of Q1 is very robust and as we look at Q2 we're seeing increased pacing from we see March better than February and we see April better than March so you know we don't we don't give monthly pacing or this now that's why we're trying to just give you a full year picture but we're going to have a full year picture and a full year picture and a full year picture and a full year picture
Speaker Change: We're feeling quite good about the year. We're feeling incredibly confident about our differentiated digital strategy and our, the fact that we're a large at-school scale publisher having, you know, owned and operated at 70 million having first-party data and then utilizing that leverage at assets for our programmatic business is quite unique. I think that's why you see people like Summit and Steel City and many others turning to us and talking to us about
Speaker Change: powering their digital advertising. And then the interactive business, again we're you know we're set up for a great 2025 call it two and a half to three million a profit growth. So even in this time of economic uncertainty
Speaker Change: We're performing quite well, and the advertising business is quite healthy on the digital side.
Turn it back to you, Patrick.
Okay. Thank you.
You got it.
Speaker Change: Thank you and that concludes our question and answer session. I would like to turn it back to Bill Wilson for closing remarks.
Bill Wilson: Thank you, operator. And thank you all for joining us this morning, we're really excited about the upcoming year we appreciate you taking the time. As Claire said at the top of the call, I would highly encourage you to read our annual shareholder letter that is available on our corporate website and was published this morning. I would also encourage you to download the new investor presentation and we look forward to talking to you soon. We'll be talking to you in the beginning of May to update you not only on Q1 but our progress through the year. So thank you and have a great day. Thank you.
Happy St. Patty's Day
Speaker Change: Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now, this corner.