Q3 2025 Townsquare Media Inc Earnings Call

Speaker #1: Good morning and welcome to Townsquare Media's third quarter 2025 conference call. As a reminder, today's call is being recorded, and your participation implies consent to the recording.

Speaker #1: At this time, all participants are in the listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press *0 on your telephone keypad.

Speaker #1: With that, I would like to introduce the first speaker for today's call, Claire Yenicay, Executive Vice President, please go ahead.

Speaker #2: Thank you, Operator, and good morning to everyone. Thank you for joining us today for Townsquare's third-quarter financial update. With me on the call today are Bill Wilson, our CEO, and Stuart Rosenstein, our CFO and Executive Vice President.

Speaker #2: 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.

Speaker #2: These statements are considered forward-looking statements under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from these statements.

Speaker #2: These statements reflect the company's belief based on current conditions, but are subject to certain risks and uncertainties including those that are detailed in the company's annual report on Form 10-K filed with the SEC.

Speaker #2: During this call, we may discuss certain non-GAAP financial measures including adjusted EBITDA, such non-GAAP financial measures should be used in conjunction with all the information contained in the quarterly year-end and current reports available on our website.

Speaker #2: 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.

Speaker #2: At this time, I would like to turn the call over to Bill Wilson.

Speaker #3: Thank you, Claire. And thank you all for joining us today. It's great to reconnect with everyone. We are pleased to share with you this morning that Townsquare's third quarter results met the total net revenue and adjusted EBITDA guidance that we provided on our last call.

Speaker #3: Reflecting our team's hard work in the current macroeconomic environment, we are proud that the execution of our digital-first local media strategy has allowed us to deliver excellent results for our clients. Despite numerous headwinds that we have encountered, we have also produced strong cash flow from operations due to the thoughtful and deliberate management of our expense base.

Speaker #3: In the third quarter, our guidance was that total net revenue would be $106.5 million to $108.5 million, and it finished right in line with $106.8 million.

Speaker #3: We also provided guidance that third quarter adjusted EBITDA would be between $22 million and $23 million, and it came in right at $22 million.

Speaker #3: Importantly, due to our strong expense management, adjusted EBITDA margins excluding political actually improved year over year despite ex-political revenue declines. By now, it should be very clear that Townsquare has transformed from a legacy broadcast company into a digital-first local media company and that our digital platform and digital execution sets us apart from others in local media.

Speaker #3: In 2024, approximately 52% of our company's total net revenue and 50% of our total segment profit was generated from our digital solutions. In the first nine months of 2025, our digital revenue grew plus 2% year over year, and as a result, our digital revenue expanded to a very significant $55% of our total net revenue which has highlighted on slide 11 is industry leading at more than two times the industry average.

Speaker #3: Total digital segment profit increased plus 4% year over year in the first nine months of the year, with a strong profit margin of 26%, up slightly year over year, and digital's year-to-date contribution grew to be $55% of our total segment profits.

Speaker #3: As we have consistently stated for many years, digital is and will continue to be Townsquare's growth engine and the area where we focus the bulk of our investment capital going forward.

Speaker #3: Consistent with our strategy of being a digital-first local media company, focusing on markets outside the top 50 in the United States, and further differentiating us from others in local media.

Speaker #3: Let's first dive into the results of our two digital divisions, starting with Townsquare Ignite, our digital advertising business. In Q3, we're seeing two very different trends play out in our digital advertising business.

In fact, in August, 45 of the top 50 US news websites experienced year-over-year declines in search traffic, with the 4% I just mentioned, averaging declines in search traffic of over 40% year-over-year in July.

As we detail on slide 13, both our local and national websites are also experiencing meaningful declines in our search engine traffic, leading to declines in our overall digital inventory.

This impacts our ability to monetize any remnant inventory unsold by our direct sales team.

Digital inventory that we have historically sold by programmatic bidding engines.

Although a much smaller part of our digital advertising segment, the declines have been significant.

For context revenue from Remnant inventory. On our websites, was approximately 20 million dollars in 2024 and accounted for 13% of our digital advertising Revenue.

In the third quarter of this year, this revenue stream declined 50% year-over-year.

From $5 million in Q3 2024 to only $2.5 million in Q2 2025, we observed a decline of $2.5 million, which represents a very high margin revenue and an acceleration from Q2's decline of approximately 25.

Thus, creating a drag on our performance and causing our digital advertising revenue to decline by -2% year-over-year in the third quarter, as opposed to the slight growth we originally expected when we last spoke.

It's important to highlight that we are excluding revenue from remnant inventory sold programmatically.

Q3 digital advertising Revenue would have increased plus, 5% year-over-year.

We continue to see these search referral Trends in Q4.

And we believe this headwind will exist through at least the first half of 2026 before Remnant revenue stabilizes at a lower run rate.

As a result, we expect Q4's digital advertising revenue to again be muted.

And I'd like to emphasize that while it's a meaningful drag in the short term, it represents only a small portion of our business and the majority of our segments including our programmatic business which represents 60% of our digital advertising Revenue continues to deliver very healthy Revenue growth.

Let's now turn to our second digital business, which is our subscription-based digital marketing solutions SAS business, Town Square Interactive. We are pleased to share that our fantastic property performance has continued in the third quarter, and we again expect strong profit growth in the fourth quarter.

In the first 9 months of 2025, segment profit has increased by 19% year-over-year, which is an increase of $3 million.

This is an excellent result as year-to-date profit margins. Expanded to 33% as opposed to the customary 28% profit margin. We've delivered over the past few years.

As we detailed on our last call, the increase in Town Square. Interact is profit margin as largely due to 3 causes

The restructuring of our customer service model in 2023 allows us to grow more efficiently.

Number 2: Changes to our sales structure late last year and early this year have led to both a smaller sales team, which is temporary, but very importantly, a more productive sales team.

And finally, number 3, the deployment of AI solutions to improve efficiency.

Thus we remain very confident that the changes we have made to both our customer service and sales models along with the continued employment of AI Solutions are setting Town Square interactive up for the next decade of efficient and profitable growth and success.

However, as I just mentioned, also highlighted our last call with a smaller sales. Team comes up, slower sales velocity and therefore, muted Revenue performance in the short term.

In the third quarter Town, Square, interactive's Revenue decreased approximately negative 2% year-over-year.

And was just in line with q2's total revenue as expected and shared on our last call.

We expect Q4 Revenue at townz, Great interactive. D, roughly in line with q3's 18.6 million, and we are confident that we will return to revenue growth during calendar year 2026. Once we have reached previous sales Staffing levels. In the meantime, we expect that strong. Proper growth will continue in Q4 and 2026 as we expect profit. Margins to remain above 30% in Q4, and above our historical levels next year.

We look forward to sharing our strong full-year profit results. Next quarter. As we expect our profit performance at TSI in 2025 to be 1 of the best in the division's 12 year history.

As you have heard me, consistently State, I am very confident that towns Square interactive is on track and set up for long-term profitable growth and success. And I believe that 2025 expected profit performance is a great proof point of that.

Turning to our third and final business, segments broadcast, local radio.

As you are all aware we view local radio as an extremely valuable asset with significant cash. Flow properties, unparalleled consumer reach and an important local connection to our audience and our clients.

However,

Radio is not a growth driver for Townsquare. In the third quarter, broadcast advertising net revenue, excluding political performance, declined exactly as we telegraphed on our last call, decreasing by 8% year-over-year, which is in line with our performance through the first half of the year.

Despite declines in broadcast revenue and macro headwinds, Skype has consistently outperformed the industry in 2025, gaining local and national broadcast market share, according to Miller Kaplan estimates.

With our differentiated local content on our local radio broadcast combined with being able to offer clients Marketing Solutions, powered by the combination of digital and radio.

We believe that we will continue to gain broadcast and total market share across our Market footprint while also generating a solid profit. As we carefully manage expenses to maintain a strong broadcast profit margin.

In fact, in Q3 our broadcast profit margin expanded significantly year-over-year when excluding political from 25% and 23 2024 to 28% in Q3 2025.

As we close out 2025, we expect to see digital advertising Trends consistent with our Q3 performance with continued strength, and programmatic, and direct sales of our owned and operated 400 plus websites and mobile apps.

Offset by ongoing headwinds tied to the decline in search referral traffic.

I expect Q4 revenue at Townsquare Interactive to be in line with Q3's revenue.

We anticipate a slight improvement in ex-political performance in our broadcast segments in Q4.

Although on a total basis, we will see a large decline due to the significant political comp we had in Q4 of last year.

Coupled with lighter than forecasted, fourth quarter of political Revenue, this year.

As a result of that and as stool will share shortly our full year revenue and adjusted, even a guidance will be revised.

Importantly, our business model continues to generate strong cash flow from operations, which we have been applying towards organic investment in our business and Debt Pay down as well as rewarding our shareholders with current returns in the form of a dividend, which we will continue to do.

And now I hand it over to student to discuss our final Financial results and guidance in more details.

Sue, please take it away.

Thank you, Bill, and good morning, everyone. It's great to speak to you today.

We're very pleased to report that our third quarter results met our revenue and EBIT guidance.

Third quarter, net revenue excluding, political declined, 4.5% year-over-year and 7.4% in total to net revenue of 106.8 million within our guidance range of 106.5 to 108.5 million.

Third quarter, adjusted ibida, excluding political Decline, 2.1% year-over-year and 13.6% in total to 22 million which was also within our guidance range of 22 to 23 million. I would like to highlight that when excluding the political impact in 2024 and 2025 adjusted ibaa margins expanded slightly from 20% in the third quarter of 2024 to 20.5% in the third quarter of 2025. As we thoughtfully managed, our expense base,

Townsquare ignited our digital advertising segment experience, slight revenue declines in the third quarter as accelerated weakness in remnant indirect digital advertising revenue offset continued growth in the direct sales of our programmatic offering and our owned and operated digital portfolio.

In total, third quarter digital advertising revenue declined 1.6% year-over-year.

To digital advertising segment profit. Margins were impacted by the same forces and as a result margins contracted year-over-year to 21.5%

as expected. And we previously projected towns were interactive or subscription, digital Marketing Solutions, third quarter, net revenue, decreased 2.3%, year-over-year,

We are thrilled to share that as expected and consistent with performance. All year Town Square interactive delivered, another quarter of very strong profit growth with Q3 segment profit, increasing 21%, year-over-year or segment, profit growth of approximately 1.1 million dollars.

Segment profit. Margins were very strong at 33% in Q3 2025 and for the full year, we expect Town Square interactive, profit margin to remain above 30%.

In 2025, we are very confident in our expectation that we will deliver strong profit growth for our Town Square interactive business, which is very beneficial after the profit losses in 2023 and 2024.

Q3 broadcast advertising that Revenue decreased in line with our expectations, which was similar to declines in the first half of the year on an ex-political basis.

In the third quarter broadcast Revenue declined, 8.1%, excluding political and 13.8% in total, each has compared to the prior year.

Importantly, broadcast, segment profit. Margins, meaningfully increase the over the year, when excluding political from 25%, in the third quarter of 2024 to 28% in the third quarter of this year,

We're very proud of how our team is working diligently to manage our broadcast expense base in the face of revenue declines.

Our third quarter, net loss was 5.5 million with 36 cents per diluted share.

In the first 9 months of the year, net loss. Improved 31 million year-over-year primarily due to the reduction in non-cash impairment charges in 20125.

We'd like to remind you that any benefit or provision for income taxes included on the face of the income statement is for GAAP financial statement purposes only.

We maintain significant tax attributes, including approximately $96 million of federal NOL carryforwards and other substantial tax shields related to the tax amortization of our intangible assets.

Continue to believe that we will not be a material cash taxpayer until approximately the year 2028.

As Bill highlighted, I would again like to emphasize. We consistently have strong cash flow generation.

We generated $18 million of cash flow from operations in the first 9 months of 2025.

cash flow from operations before, cash interest payments was 59 million and

is 5% or $3 million higher than the previous year.

In the third quarter, we repaid 9 million of our turn loan, including $6 million, which we purchased at a discount in the open market and our second amortization payment of 2.9 Million.

since the February, refinancing we have reduced our outstanding debt by 17 million, as the end of, as of the end of the third quarter,

In addition, our cash this year has been used to fund $41 million of interest payments.

$10 million of dividend payments and $28 million of fees associated with our February refinancing.

With 463 million of total debt outstanding and 3 million dollars of cash on hand at September 30th. Our net Leverage is 4.71 times, and I'd like to highlight that since our Term Loan is a floating rate instrument, to 2 to 2, recent interest rate Cuts totaling 50 basis points, translates to roughly 2.3 million of annualized Interest reduction.

Based on the current debt balance.

As always, our number 1 priority, is to invest in a local business to organic internal Investments that support our revenue and profit growth, particularly our digital growth engine.

We plan to continue to invest in our digital product technology, sales content, and support teams, specifically in our Town Square Interactive and Town Square Ignite businesses, to maintain our strong competitive advantage in these markets outside the top 50 cities.

In addition, we plan to use our excess cash flow to reduce our debt, through both mandatory and voluntary debt repayments and of course, support our high yielding dividend.

Our board has approved our next quarterly dividend, payable on February 2nd to shareholders of record as of January 26th.

The dividend of 20 cents per share, equates to 80 cents, per share on an annualized basis, and implies an annual payment of approximately 13 million dollars based on our current Share account.

And a dividend yield of approximately 13% based on our current share price.

For a full year, outlook due to much steeper than expected. Declines in our search engine traffic and its related. Indirect Remnant Revenue coupled with much lower than forecasted political Revenue. We expect that our net revenue will come in lighter than previously expected. As these are both very high margin revenue streams. This also impacts our adjusted, Eva dog, guidance, but due to our strong expense management to a much lesser degree,

Specifically for the fourth quarter, we expect net revenue to be between 105 million and 109 million.

We expect fourth quarter adjusted EBITDA to be between $21.5 million and $23.5 million. As a reminder, in the fourth quarter of 2024, we generated $7.2 million of political revenue. First, our current forecast for less than $1 million of political revenue in the fourth quarter of 2025.

This guidance implies that Townsquare's 2025 full-year revenue will be between $426 million and $430 million, with political revenue of less than $2 million, compared to the $3 million we generated in 2023, the last non-political year.

We expect full-year adjusted EBITDA will be between $88 million and $90 million. And with that, I will now turn the call back over to Bill.

Thank you, Stu, and thanks to everyone for taking the time to be updated on Townsquare. Q3 results this morning.

We greatly appreciate it.

I'd like to close today's call by emphasizing our confidence in our digital-first local media strategy and the long-term profitable growth potential of our digital platform.

Direct digital advertising sales remain strong, and Townsquare Interactive is driving incredible profit growth in 2025, with margins north of 30%.

Our mature cash cow broadcast advertising platform continues to generate a solid profit, and Q3 ex-political broadcast profit margins are actually up year-over-year due to solid expense management.

By 17 million dollars through September.

All while maintaining our high yielding dividend delivering attractive current returns to our shareholders.

Most importantly, we are confident in our ability to build shareholder value for our investors through long-term net revenue profit and cash flow growth. Net leverage reduction, and future dividend payments.

As always, we wouldn't have the confidence in our long-term success without the Town Square, team's effort, passion, and commitment. That is directly driving our growth and Innovation each day.

I could not be more appreciative of our team and their tremendous work.

With that, operator at this time, please open the line for any and all questions.

Thank you. And ladies and gentlemen, we will now begin the question and answer session. Can I ask a question? You may press the star, followed by the number 1 on your telephone keypad. If you're using a speaker-phone, please speak up your handset before pressing the keys to withdraw your question. Please. Press star followed by the number 2 with without our first question comes from the line of Michael capinski with Nobel Capital markets. Please go ahead.

Thank you and good morning everyone. Um, just a couple of questions here. Um, first I want to start on the broadcasting side. Um,

I see that, you know, obviously, we see core advertising, kind of Decline, and typically, in an off election year, we would kind of get the core advertising up because of the displacement from political and, and we should just see continued deterioration there. Of course, secular headwinds. I get that I was just wondering if. And when do you think we'll see some stabilization on core? Um, advertising there? And I know it's not a, a main focus for you, but I was just wondering, what do you think will take to see at least some stabilization on on the core advertising front?

Thank you, Michael. Always good to hear from you good morning. Um yeah, obviously as you just noted uh there's a secular decline. Currently in broadcast radio is similar to broadcast television from what we've heard and what we've seen from public reporting companies. But what we've also heard about year to date is download double digits for the industry. Uh, as we just reported this morning, uh, just exactly what we we telegraphed on our last call that 23 would be down negative 8%, uh, exploitable, which is exactly where we were for q1 and Q2. So, it came in directly where we thought, um, we also just noted, uh, as in the prepared remarks, that Q4 is pacing, slightly better as political, um, by a point, point and a half. So it's not dramatic, but it's it, it is slightly. Improving

Um, and it's also important to note that our broadcast profit margin, uh, is up year-over-year. So in Q3 this year, our broadcast profit margin is 28%, which is actually up from Q3 2024, which was 25%, so, 3 basis point Improvement. So clearly, uh, we've always taken the view that obviously digitals are growth engine uh, and that our broadcast business with 3 love. And we don't think we'd have the success in our, 2, digital divisions with, without the power of broadcast radio, and the connection it has with our communities. It is a traditional Cash Cow, and it is in our view, not not our growth driver. Um, I would also highlight and we're quite proud of this, is that, um, our local sales team, uh, is increasing share. So the, we're if you look at Miller Kaplan, uh, we're taking local spot share from our competitors in the 74 markets where we operate, radio stations and we're taking total spot share. Um so in a declining Market where in essence, doing better than the rest of the

Industry, which is evident in our negative 8 versus the industry is negative 11 going to the, the, the heart of your question, which was, when do we expect quote, unquote stabilization? Um, so again, we're seeing slight Improvement in Q4. Obviously, the macro environment throughout 20205 has been incredibly, uh, challenging given the uncertainty, uh, the uncertainty coming into the year. Um, obviously Liberation day on April 2nd. Uh, we detailed, uh, quite

Next year will be a great political year. Um, we expect to be in low single digits. So that's what our expectation. Michael is in terms of core radio, besides call it in 26, uh, negative, uh, negative mid single digits and then 2728 negative, um, low single digits, and I'll turn it back to you for your other questions or any follow-ups on that.

You you've been able to pretty uh to maintain some pretty impressive. Margins is there much to to to cut there? I mean given given that you have these pretty high margins. I mean it's surprising that given the the type of Revenue declines that you had for our advertising. You still maintain some pretty healthy margins.

Well, I appreciate you noting that and and and we agree. And uh you know stew and his team as well as many others. Uh have done a great job quite quite honestly. The short answer is yes. We have a lot of opportunity. You know, we we've been, we talked about this on a couple calls but we're currently continue to deploy AI Solutions throughout uh, our company that are providing efficiency as well as increased productivity. So we're very proud of the fact that if you look at our broadcast profit margins, X political they're up and quite healthy as you noted and we are quite confident. We'll be able to maintain that. Uh, you know, we're we're profit. Margins up.

As I just noted, um, to 28% 3 basis points up from 25%, in Q3 25 on a decline of negative 8% X. Political, uh, is quite, uh, great work for that. Our team has done and I'm quite proud of, we will be able to continue to do that. Um, and take out expenses in line with whatever the revenue comes in. And I think we've proven that over the last several years, and we'll do the same moving forward.

I'll turn it back to you Michael indicated that there. They, that they have had some government related advertising in Q4, like, Medicare enrollment things like that. Do, did you have any type of government related, shutdown, advertising type impact?

We are you saying you've heard from others that they've gotten incremental um, by or yeah, we have not, we have not seen that we have not seen incremental buys related to the government shutdown. We, we've seen softness as it relates to that talking to our local customers. Uh, National continues to be a significant headwind for us. It's a small part of our business less than as we've talked about before less than 10% of our broadcast business. But now the short answer is we have not seen a positive impact or or incremental buys faced around the government shutdown or Medicare or anything around that.

Yeah. No. I was actually it was the reverse that they were saying that they had in from. Yeah from advertisers. Yes we are. We have seen that we've seen, you know, canceled orders and things like that. We we've seen that throughout the years which the Doge Cuts backs and Health Services. So yes, the short, if you're asking, if we've seen a negative impact against, I'm sorry, I misunderstood the question. The answer is yes.

Okay, and then um, final question I don't want to take up too much time um, part of the attraction of the new office in Phoenix was you know, in your interactive section was to focus on the west coast expansion. I was just wondering if you could talk a little bit about your interactive business, um, on the west of the Mississippi. What were your goals on Milestones? Could you just talk a little bit about your thoughts on how that, um, uh, offices kind of progressing? Yes. So quite pleased with the progression of the Phoenix office, as well as Town Square interactive, SAS based subscription division of our company. I, I'll first speak about Phoenix and you asked that, and I'll just give a little color on Town Square interactive overall. So the primary driver of opening, the office was to be able to, uh, increase our talent pool. And that's why we picked Phoenix. It's, it's been a great place to hire sales talent. And then after we hired sales Talent, we started to add customer support for Focus as well as what we call sub subject. Matter experts.

About 28%, um, given our new service model, which we've outlined in detail on our earnings calls in the past, given the new sales Paradigm where we uh, put a higher level of Revenue per salesperson in place as well as the employment of AI solutions, to customary 28% profit margin has improved to 33% year to date, and we expect that to hold in in Q4. So they're doing a tremendous job. The revenue in his Essence stagnant. And we, we detailed why on the last call, but we really sent reduced our sales force, quite substantially. I think, on the last call, we talked about over 40%, but the profitability of each sales rep that remains as well, as we add to the team. Moving forward is much much higher and therefore, that you've got this tremendous profit growth, even though the revenue is stagnant, as we go into 26, the revenue growth will come back. As we add more and more Sellers and get back closer to our sales level, in terms of number of Sellers. And we

Believe we'll still be able to operate, uh, at a 30 plus percent profit margin even as we aggressively hire our sales team. So just wanted to provide that color, you know, after losing I think it was about 5 million dollars in profit between 232023 and 2024 to. Now add back, you know, call over 3, probably 3 and a half million in 255. In incremental profit year-over-year I think just speaks to the underlying strength of the division and how confident we are moving forward in Town Square interactive and going

Back to your original question that includes our operations in Phoenix. So I'll turn it back to you Michael unless you don't have any other questions. We'll uh we'll open up to others, but I want to give you the opportunity for any follow-ups.

Thank you, Bill. That, that actually answered the next question I had. So I'll let others ask questions. Thank you, thank you. Great to hear from you. Have a good day.

And the next question comes from the line of Patrick Schultz.

Thank you. Uh, yeah. You you actually, uh, kind of answered. I think, most of the questions I was going to ask about, uh, maybe longer term expectations on, uh, profitability on interactive. But is that sort of, like, in the low to mid-30s range, kind of something, you would expect to keep at going forward or do you think there would be room for expansion from there? I guess, maybe like a time frame for getting to more?

Uh yeah, time frame for you know, potential margin expansion at Interactive.

Yeah. Great great. Great. Great to hear from you Patrick. Thank you for the questions as always. Um, I expect us to continue to be in the low 30% margins over the next couple of years. Particularly with the aggressive investment, we we want to build back the sales team, you know, as I noted on our last call, we lost over 40% and it was definitely the right thing clearly by The Profit growth. Um, and so, in the short term, I expect us to still live in that uh, that 32 333 percent profit margin area. But I believe there is room for margin expansion as we look out in.

27, that back half of 27, 2829. Uh, that's clearly an opportunity. As we really rebuilt our service model and now our sales team with scale and efficiency in mind, as well as, obviously, great customer service. So, yes, I believe we'll be in this profit margin calling for the next 18 to 24 months, which is a huge improvement from the last several years. But there is an opportunity for margin expansion after that, and I'll turn it back to you, Patrick.

Okay. Uh, and then on ignite, um, I I think I heard you say that excluding the uh, programmatic headwinds that it was up. I think mid single digits in Q3, uh, if if I have that wrong, please correct me. But uh, just could you maybe talk about like the maybe different Trends in that between the, um,

Your your own markets and the third-party selling or the the third-party markets and just maybe some of like the different macro Trends in there versus um any specific uh category issues or yeah.

No, great question. I'm, I'm glad you asked. Because if, if nobody did ask on the call, I was going to provide some color in the closing remarks. So, uh, very timely question and I'm glad you asked it. So, you are exactly right without the remnant drag. So that's indirect sales. So any unsold inventory. Um, that we've been customarily doing, um, if you remove that and I'll talk about that specific.

Is made up of programmatic, which is 60% of our digital advertising revenue and then the remaining 40% is what we called owned and operated platforms. So, digital advertising on our, our own properties that we own, like our mobile apps, our websites, our social platforms, and so forth. So, specifically on our owns and operated, I couldn't be more proud of the Town Square team. I mean, they are just killing it. So in Q3, it was up 10%. So digital advertising on our own properties, which makes up 40% of our total digital advertising was up. 10% in Q3, as well as up, 10% year to date, um, which were quite proud of. So the remaining programmatic of 60%, which is really, you know, we're a full digital agency, which we talked about on the call, everything from Creative Media, buying optimization insights, you know, leveraging, our first-party data from our owned and operated, you know, all all the things we're doing there. Um, was up, high single digit.

In Q3. So, again, great performance and programmatic at high single digits and then up 10% on our owned and operated. So then, you know, obviously the question is, um, you know what's happening in the indirect. So indirect so this is unsold, uh, inventory that we would, then make available to real time bidding exchanges. Uh, was quite quite healthy for us because we had such a large digital audience. Um, as we noted on the call, this is not a phenomenal.

And you need to tell Square. This is happening to any web publisher at scale. So, in the prepared remarks, we said that audience Trends based on AI, so if that's AI results at the top of Google, if that's people switching from Google to perplexity or claw or, or whatever their, uh, Chachi PT, whatever their their, their favorite, or their, whatever AI they're using. Uh, so audience Trends were down, 40% on average to web Publishers at Scale based on search traffic. So that is quite quite substantial. So, for Town Square, our re Remnant Revenue in 2024 was 20 million, and that was very, very high margin over. 90% could be over 95% profit margin. So that's a substantial number. That's 20 million in 2025, we believe, it will decrease 7.5 million so go to about 12.5 million in 2025. So that's obviously down 7.

1.5 million in the first half of the Year 2025. It was only down 2 a little over 2 million.

So, in the second half, we just sat on the call, Q3 was down 2.5 million, which was a decline of 50% year-over-year on a, uh, in Q4, we expect that to get slightly worse. So the second half, we expected the client in remnant of 5.5 million. Um, so again for a full year basis, that's down 7.5 million. So this is the number

Number 1 Reason by far that we had to adjust our Revenue guide and our profit guide because our profit guide, uh, really declined, you know, 2 on the low end for all together. So a range of 2 to 4, um, we were not expecting a 5.5 million, uh, decline in Remnant Revenue, which again, is over, 95% profit margin. So, you're talking about an over 5 million dollar profit decline. Um, we expected it to continue along the lines of the first half and that accelerated from being down a little over 2. In the first half to being low down 2 weeks back, 5.5 million in the second half. So that was the main driver of our change, in guidance, on the revenue line and the profit line, um, to a small effect. As Stu said, in the prepared remarks, our political we expected over 3 million and coming in under 2 million. Um, you know, although it was a competitive race, New Jersey just didn't see the money that we expected. The good news is our partners.

Cats who drive a lot of our political along with our own team said that overall in 2025, political was very healthy for broadcast radio. It just didn't line up with our market. So, we're quite bullish on 2026 political. Um, but it just didn't come in. So, I digressed to your original question, and I wanted to give a lot of callers. So, digital advertising Ignite work couldn't be more proud of this division. It is the fastest growing part of our company for the last several years. It will continue to be our.

Our owns and operated was up, 10%, direct sold in Q3, as well as year to date. And our programmatic division, which is 60% of our digital advertising was up high single digits, um, and, and doing quite well. So, I gave a lot of detail. I thought it was important given the, uh, Dynamics and indirect, we think that indirect Remnant, uh, will stabilize in the back half of 26. So we'll have a little bit of a comp issue in the first 6 months of 26. But stabilizing the back half of 26, uh, and get set this up quite nicely for a great growth in interactive in 26 and great growth in ignite in 26 obviously as I shared with Michael's questions about uh our broadcast. And what we expect uh from a core perspective. We expect our um broadcast business ex-political to improve in 26 and then obviously we have the benefit of going from you know this year under 2 million in political Revenue we expect over 10 million.

Next year. So I think it sets us up quite nicely for our rebound into 2026. So long answer to your question but I hope uh thank you for indulging me on 1 of the provide that color for everybody on the call and I'll turn it back to you for any follow-ups or additional questions. Patrick

Uh, so I guess, you know, just the digital media partnerships and...

I think you said $6 million from that in the year is the expectation.

I guess I'm just kind of curious, like just how much of that came in Q3?

what that kind of implies for just the

the uh,

Your own Market digital selling out there. It's

Yeah, and again, so the our own our own Market, digital selling efforts again, are are owned and operated is up 10%. So there's nothing to do with media partnership, up, 10% in Q3 year day, so programmatic was up high single digits. So if you, if you remove media Partnerships it would still be high single digits better by but but down about a point and a half less than, uh, if you removed it. Um, and again, we have a strong pipeline, uh, we're quite pleased with the 6 part. We have now, uh, they're quite pleased with us and we as we detailed on our last few calls, we you were taking this slowly because we're treating it like we treat a as if we were, you know, acquiring a market and and and and part of our own team. So we want to make sure we put in all of the training, all of the sales training. We, we detailed on our last calls, we're actually going in with our sales team and training, uh, the sales team as of our partners there. And it's, uh, it's going quite well for them. We, we know that because we see the lifts of where they were,

Prior to being with us and they were with other companies in the programmatic space, um, and they switched to us because of our robust capabilities. And they're quite pleased with their own revenue and profit growth, and we're quite pleased in what we've done for them. And probably more importantly. What I just detailed is the future for this division growing from this year, being 6 million in total to what we believe can be 50 million over 5 years and we'll see nice nice growth in 26 in that division as well. So uh, little bit, uh, is, you know, that high single digits would remain in programmatic but be about a point and a half less Without Me, Maybe, maybe even less than a point and a half. Maybe it was just over a point less, uh, with the media Partnerships.

Okay, thank you.

Thank you, Patrick. I appreciate it, as always. Hope you have a great day.

Thank you. We have no further questions at this time. I would like to turn it back to Bill Wilson for closing remarks.

Thank you, operator, and thank you all for joining us this morning to hear about, not only our Q3 results, but probably more importantly, what we expect for the rest of your and even more telling is, uh, what we expect in 2026 to be a great year for Town Square. So we look forward to updating you again. It's going to be a little bit of time, uh, for our year end report. But if anybody has any questions as always, please reach out at any time, we're available to you and I hope you have a great day.

And that concludes today's conference call. Thank you all for joining you may now. Disconnect