Q3 2025 Spanish Broadcasting System Inc Earnings Call

Speaker #1: Good day, and welcome to the Spanish Broadcasting third quarter 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Good day and welcome to the Spanish Broadcasting Q4, 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note this event is being recorded. I would now like to turn the conference over to Mr. Mike Smargiassi. Please go ahead, sir.

Operator: Good day and welcome to the Spanish Broadcasting Q4, 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note this event is being recorded. I would now like to turn the conference over to Mr. Mike Smargiassi. Please go ahead, sir.

Speaker #1: Please note, this event is being recorded. I would now like to turn the conference over to Mr. Mike Smarjassi. Please go ahead, sir.

Speaker #2: Thank you, and good day, everyone. Before we begin, please recognize that certain statements on this conference call are not historical fact. They may be deemed, therefore, to be forward-looking statements under the Private Securities Litigation Reform Act of 1995.

Mike Smargiassi: Thank you, and good day, everyone. Before we begin, please recognize that certain statements on this conference call are not historical fact. They may be deemed, therefore, to be forward-looking statements under the Private Securities Litigation Reform Act of 1995. In particular, statements about future results expected to be obtained from the company's current strategic initiatives are forward-looking statements. Many important factors may cause the company's actual results to differ materially from those discussed in any such forward-looking statement. The Spanish Broadcasting System undertakes no obligation to publicly update or revise its forward-looking statements. Please also note that we will be discussing non-GAAP financial measures.

Mike Smargiassi: Thank you, and good day, everyone. Before we begin, please recognize that certain statements on this conference call are not historical fact. They may be deemed, therefore, to be forward-looking statements under the Private Securities Litigation Reform Act of 1995. In particular, statements about future results expected to be obtained from the company's current strategic initiatives are forward-looking statements. Many important factors may cause the company's actual results to differ materially from those discussed in any such forward-looking statement. The Spanish Broadcasting System undertakes no obligation to publicly update or revise its forward-looking statements. Please also note that we will be discussing non-GAAP financial measures.

Speaker #2: In particular, statements about future results expected to be obtained from the company's current strategic initiatives are forward-looking statements. Many important factors may cause the company's actual results to differ materially from those discussed in any such forward-looking statement.

Speaker #2: Spanish Broadcasting System undertakes no obligation to publicly update or revise its forward-looking statements. Please also note that we will be discussing non-GAAP financial measures.

Speaker #2: The company believes that operating income before depreciation and amortization, loss on the disposal of assets, impairment charges, and other operating expenses excluding non-cash, stock-based compensation, or adjusted OEBITA is useful in evaluating its performance.

The company believes that operating income before depreciation and amortization, loss on the disposal of assets, impairment charges, and other operating expenses, excluding non-cash stock-based compensation or adjusted OIBDA, is useful in evaluating its performance because it reflects the measure of performance for the company's stations before considering costs and expenses related to capital structure and dispositions. This information is not intended to be considered in isolation or as a substitution for operating income, net income or loss, cash flows from operating activities, or any other measure used in determining the company's operating performance or liquidity that is calculated in accordance with US GAAP. I will now turn the conference over to Mr. Raúl Alarcón.

Mike Smargiassi: The company believes that operating income before depreciation and amortization, loss on the disposal of assets, impairment charges, and other operating expenses, excluding non-cash stock-based compensation or adjusted OIBDA, is useful in evaluating its performance because it reflects the measure of performance for the company's stations before considering costs and expenses related to capital structure and dispositions. This information is not intended to be considered in isolation or as a substitution for operating income, net income or loss, cash flows from operating activities, or any other measure used in determining the company's operating performance or liquidity that is calculated in accordance with US GAAP. I will now turn the conference over to Mr. Raúl Alarcón.

Speaker #2: Because it reflects the measure of performance for the company's stations, before considering costs and expenses related to capital structure and dispositions. This information is not intended to be considered in isolation or as a substitution for operating income.

Speaker #2: Net income or loss, cash flows from operating activities, or any other measure used in determining the company's operating performance or liquidity that is calculated in accordance with US GAAP.

Speaker #2: I will now turn the conference over to Mr. Raul Alarcón.

Speaker #3: Thank you, Mike. Good morning, ladies and gentlemen, and thank you for joining me for SBS' third quarter 2025 earnings call. Since our last call, we continued to make notable progress in implementing a range of initiatives aimed at strengthening and diversifying our revenue sources and evolving our national platform at scale, while simultaneously reducing our operating costs.

Raúl Alarcón: Thank you, Mike. Good morning, ladies and gentlemen, and thank you for joining me for SPS's Q4 2025 earnings call. Since our last call, we continue to make notable progress in implementing a range of initiatives aimed at strengthening and diversifying our revenue sources, and evolving our national platform at scale while simultaneously reducing our operating costs. This has been a multi-year concerted plan that is delivering tangible results and positioning our organization for success over the longer term. Despite a very challenging environment across our industry, which has impacted revenues this year, we believe the strategic steps we are taking are, in fact, bearing fruit while putting us in a stronger position to deliver returns as the overall market environment improves.

Raúl Alarcón: Thank you, Mike. Good morning, ladies and gentlemen, and thank you for joining me for SPS's Q4 2025 earnings call. Since our last call, we continue to make notable progress in implementing a range of initiatives aimed at strengthening and diversifying our revenue sources, and evolving our national platform at scale while simultaneously reducing our operating costs. This has been a multi-year concerted plan that is delivering tangible results and positioning our organization for success over the longer term. Despite a very challenging environment across our industry, which has impacted revenues this year, we believe the strategic steps we are taking are, in fact, bearing fruit while putting us in a stronger position to deliver returns as the overall market environment improves.

Speaker #3: This has been a multi-year, concerted plan that is delivering tangible results and positioning our organization for success over the longer term. Despite a very challenging environment across our industry, which has impacted revenues this year, we believe the strategic steps we are taking are, in fact, bearing fruit.

Speaker #3: While putting us in a stronger position to deliver returns as the overall market environment improves. Looking at our momentum this year, our progress is reflected in our sequential quarterly improvements from Q1 2025 in net revenue, which was up 5%, station operating income up 35%, and adjusted OIBDA up 61%.

Looking at our momentum this year, our progress is reflected in our sequential quarterly improvements from Q1 2025 in net revenue, which was up 5%, operating income up 35%, and Adjusted OIBDA up 61%. Underlining our plan and our outlook through our multi-platform ecosystem, we provide our advertisers with exceptional reach into the $4 trillion U.S. Hispanic market, the fifth largest economy in the world. Our audience loyalty has been consistently strong this year, once again representing among the largest aggregated Hispanic audiences in the nation, providing advertisers and brand partners with an exceptional multi-platform ecosystem to promote their brands. And this massive audience reach has only grown in the past year through our expansion efforts and organic growth, which is driven by our industry-leading talent and highly relevant and popular content.

Raúl Alarcón: Looking at our momentum this year, our progress is reflected in our sequential quarterly improvements from Q1 2025 in net revenue, which was up 5%, operating income up 35%, and Adjusted OIBDA up 61%. Underlining our plan and our outlook through our multi-platform ecosystem, we provide our advertisers with exceptional reach into the $4 trillion US Hispanic market, the fifth largest economy in the world. Our audience loyalty has been consistently strong this year, once again representing among the largest aggregated Hispanic audiences in the nation, providing advertisers and brand partners with an exceptional multi-platform ecosystem to promote their brands. And this massive audience reach has only grown in the past year through our expansion efforts and organic growth, which is driven by our industry-leading talent and highly relevant and popular content.

Speaker #3: Underlining our plan and our outlook through our multi-platform ecosystem, we provide our advertisers with exceptional reach into the $4 trillion U.S. Hispanic market, the fifth largest economy in the world.

Speaker #3: Our audience loyalty has been consistently strong this year, once again representing among the largest aggregated Hispanic audiences in the nation, providing advertisers and brand partners with an exceptional multi-platform ecosystem to promote their brands.

Speaker #3: This massive audience reach has only grown in the past year through our expansion efforts and organic growth, which is driven by our industry-leading talent and highly relevant and popular content.

Speaker #3: At the core of our success, our stations continue to deliver exceptional audience shares in the nation's largest markets. Nielsen's latest audience metrics confirm our leadership position in Latino media, including the number one Hispanic radio station in the world, WSKQ-FM in New York City; the national leadership position in total Hispanic listeners with the largest average quarter-hour audience, 12 years of age and older; four of the top six over-the-air Hispanic stations in the country; and the top three Hispanic streaming stations in the nation.

Raúl Alarcón: At the core of our success, our stations continue to deliver exceptional audience shares in the nation's largest markets. Nielsen's latest audience metrics confirm our leadership position in Latino media, including the number one Hispanic radio station in the world, WSKQ-FM in New York City, the national leadership position in total Hispanic listeners with the largest average quarter-hour audience, 12 years of age and older, four of the top 6 over-the-air Hispanic stations in the country, and the top 3 Hispanic streaming stations in the nation. A strong validation of the company's multi-platform strategy as evidenced by the continued growth of our newest outlet, KROI in Houston, the most successful startup ever in Spanish radio. Early results from the LaMusica aggregator platform, YouTube, and livestream ad integrations underscore the strength and scalability of our digital transformation.

At the core of our success, our stations continue to deliver exceptional audience shares in the nation's largest markets. Nielsen's latest audience metrics confirm our leadership position in Latino media, including the number one Hispanic radio station in the world, WSKQ-FM in New York City, the national leadership position in total Hispanic listeners with the largest average quarter-hour audience, 12 years of age and older, four of the top 6 over-the-air Hispanic stations in the country, and the top 3 Hispanic streaming stations in the nation. A strong validation of the company's multi-platform strategy as evidenced by the continued growth of our newest outlet, KROI in Houston, the most successful startup ever in Spanish radio. Early results from the LaMusica aggregator platform, YouTube, and livestream ad integrations underscore the strength and scalability of our digital transformation.

Speaker #3: A strong validation of the company's multi-platform strategy, as evidenced by the continued growth of our newest outlet, KROI in Houston—the most successful startup ever in Spanish radio.

Speaker #3: Early results from the La Música aggregator platform, YouTube, and livestream ad integrations underscore the strength and scalability of our digital transformation. Monthly active uniques have grown 13.4% year over year, and we are upgrading our proprietary content manager system to support additional station streams and expanded content offerings from third-party programming partners.

Raúl Alarcón: Monthly active uniques have grown 13.4% year over year, and we are upgrading our proprietary content manager system to support additional station streams and expanded content offerings from third-party programming partners. Sequential audience growth registered 14% in Q3 across both audio and live video. FAST channel integrations continue to broaden LaMusica's reach, including a 43% sequential increase in new Q3 users through the company's Roku partnership, which was launched last summer. Digital revenue was up 17% over Q2 and 29% over Q3, 2024. We now feature nearly 70 daily hours of live video content consisting of our popular entertainment shows and iconic personalities, all accessible via multiple streaming platforms and at minimal incremental cost.

Monthly active uniques have grown 13.4% year-over-year, and we are upgrading our proprietary content manager system to support additional station streams and expanded content offerings from third-party programming partners. Sequential audience growth registered 14% in Q3 across both audio and live video. FAST channel integrations continue to broaden LaMusica's reach, including a 43% sequential increase in new Q3 users through the company's Roku partnership, which was launched last summer. Digital revenue was up 17% over Q2 and 29% over Q3, 2024. We now feature nearly 70 daily hours of live video content consisting of our popular entertainment shows and iconic personalities, all accessible via multiple streaming platforms and at minimal incremental cost.

Speaker #3: Sequential audience growth registered 14% in Q3 across both audio and live video. FAST channel integrations continue to broaden La Música's reach, including a 43% sequential increase in new Q3 users through the company's Roku partnership, which was launched last summer.

Speaker #3: And digital revenue was up 17% over Q2 and 29% over Q3 2024. We now feature nearly 70 daily hours of live video content, consisting of our popular entertainment shows and iconic personalities.

Speaker #3: All accessible via multiple streaming platforms and at minimal incremental cost. On top of these initiatives, we have also delivered strong results in our live events division this year, drawing a total of 70,000 fans and generating more than $10 million in ticket and sponsorship revenues across a series of SBS-branded concerts.

On top of these initiatives, we have also delivered strong results in our live events division this year, drawing a total of 70,000 fans and generating more than $10 million in ticket and sponsorship revenues across a series of SPS-branded concerts. As we execute on our growth plan and build on these revenue-generating initiatives, we've also continued to diligently reduce our operating expenses, as reflected in the 12% decrease during Q3, and 11% decrease year to date. We are likewise predicting a similar reduction of approximately $10 million in operating costs in 2026 as we continue to properly adjust to industry and market factors. These operating efficiency efforts have been bolstered by our focus on strategically investing in our digital transition as we are now operating a larger and more powerful portfolio of brands across a more efficient and increasingly digital infrastructure.

Raúl Alarcón: On top of these initiatives, we have also delivered strong results in our live events division this year, drawing a total of 70,000 fans and generating more than $10 million in ticket and sponsorship revenues across a series of SPS-branded concerts. As we execute on our growth plan and build on these revenue-generating initiatives, we've also continued to diligently reduce our operating expenses, as reflected in the 12% decrease during Q3, and 11% decrease year to date. We are likewise predicting a similar reduction of approximately $10 million in operating costs in 2026 as we continue to properly adjust to industry and market factors. These operating efficiency efforts have been bolstered by our focus on strategically investing in our digital transition as we are now operating a larger and more powerful portfolio of brands across a more efficient and increasingly digital infrastructure.

Speaker #3: As we execute on our growth plan and build on these revenue-generating initiatives, we've also continued to diligently reduce our operating expenses, as reflected in the 12% decrease during the third quarter and 11% decrease year to date.

Speaker #3: We are likewise predicting a similar reduction of approximately $10 million in operating costs in 2026 as we continue to properly adjust to industry and market factors.

Speaker #3: These operating efficiency efforts have been bolstered by our focus on strategically investing in our digital transition, as we are now operating a larger and more powerful portfolio of brands across a more efficient and increasingly digital infrastructure.

Speaker #3: We believe this strategy and our revenue expansion and platform diversification plan, combined with our continued emphasis on cost reduction, will strengthen our ability to deliver revenue growth as well as enhanced cash flows as the market improves.

We believe this strategy and our revenue expansion and platform diversification plan, combined with our continued emphasis on cost reduction, will strengthen our ability to deliver revenue growth as well as enhanced cash flows as the market improves. And lastly, in support of the comprehensive deleveraging plan previously delineated, we remain committed to divesting our remaining television assets as well as ancillary real estate in the very near future. And with that, I'd like to thank all of you for joining us this morning. Your continued support is very much appreciated by all of us at SPS. For those of you that would like to contact us directly with any further questions or comments, please email us at investor.relations@spscorporate.com. Thank you all.

Raúl Alarcón: We believe this strategy and our revenue expansion and platform diversification plan, combined with our continued emphasis on cost reduction, will strengthen our ability to deliver revenue growth as well as enhanced cash flows as the market improves. And lastly, in support of the comprehensive deleveraging plan previously delineated, we remain committed to divesting our remaining television assets as well as ancillary real estate in the very near future. And with that, I'd like to thank all of you for joining us this morning. Your continued support is very much appreciated by all of us at SPS. For those of you that would like to contact us directly with any further questions or comments, please email us at investor.relations@spscorporate.com. Thank you all.

Speaker #3: And lastly, in support of the comprehensive deleveraging plan previously delineated, we remain committed to divesting our remaining television assets, as well as ancillary real estate, in the very near future.

Speaker #3: And with that, I'd like to thank all of you for joining us this morning. Your continued support is very much appreciated by all of us at SBS.

Speaker #3: For those of you that would like to contact us directly with any further questions or comments, please email us at investor.relations@sbscorporate.com. Thank you.

Speaker #3: all.

Speaker #1: The conference is now

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.