Cumulus Media Inc. (CMLS) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several challenges: a decline in total revenue, a significant drop in broadcast revenue, and reliance on digital growth that hasn't offset these declines. Despite cost reductions, financial pressures persist. The Q&A highlighted uncertainties, particularly in national advertising and ROI concerns in DMS. Although digital growth is strong, the overall sentiment is negative due to declining broadcast revenue, regulatory risks, and lack of clear guidance on future improvements. The absence of market cap information limits precise prediction, but the overall sentiment leans towards a negative outlook for the stock price.
Key Financial Performance
Total Revenue Down 9.2% year-over-year, slightly better than the pacing guidance provided earlier. The decline was primarily driven by macroeconomic pressures.
Digital Marketing Services (DMS) Revenue Up 38% year-over-year, an acceleration from 30% growth in the previous quarter. This growth was driven by strong sales execution, organic investments, and ROI outperforming industry benchmarks by 25%.
Total Digital Revenue Up 20% year-over-year, excluding the impact of the loss of Daily Wire and Dan Bongino. Growth was supported by a 38% increase in DMS revenue and over 30% growth in podcasting (normalized for comparison issues).
Broadcast Revenue Down 20% year-over-year in the network segment. Decline attributed to the discontinuation of Daily Wire and Dan Bongino, reduced sports inventory, and weak national demand.
EBITDA $22.4 million for the quarter. The decline was influenced by lower broadcast revenue and higher expenses associated with DMS growth.
Cost Reductions $5 million of annualized fixed cost reductions in Q2, adding to a total of $175 million in fixed cost reductions over the last 5 years.
Cash Position $97 million at the end of the quarter, inclusive of a $55 million draw on the ABL revolver to maximize flexibility.
CapEx $5.5 million for Q2, with full-year CapEx expected to be below the $22.5 million guidance provided earlier.
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Operating Highlights
Digital Marketing Services (DMS): Achieved 38% year-over-year growth in Q2, with an annual run rate of nearly $80 million. Expected to surpass $100 million run rate early next year. Investments in digital sales, training, and operational execution contributed to this growth.
Podcasting: Normalized year-over-year growth of over 30%, excluding comparison issues with Daily Wire and Dan Bongino.
Revenue Market Share: Grew market share in all broadcast spot revenue channels and digital revenue market share. Achieved 11 consecutive quarters of ratings share growth in PPM markets.
Local Digital Marketing Services: Outperformed peers with growth nearly double the radio industry and 4x the digital ad market growth rate.
Cost Reductions: Achieved $5 million in annualized cost reductions in Q2, totaling over $175 million in fixed cost reductions since 2019.
AI Integration: Accelerated use of AI for sales enablement, training, cost rationalization, and business process enhancements. Over 100 AI-related projects identified for execution.
Network Sales Restructuring: Streamlined legacy processes and aligned go-to-market efforts, resulting in several million dollars of cost savings expected in 2026.
Digital Growth Strategy: Focused on leveraging client relationships and multi-platform content to drive digital revenue growth. Investments in digital capabilities and partnerships are fueling record KPIs.
AI Adoption: Training sales force on AI tools for crafting pitches, competitive analysis, and pricing strategies. AI expected to unlock long-term value creation.
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Risk or Challenges
Broadcast Revenue Decline: The company experienced a 9.2% decline in total revenue, driven by macroeconomic pressures and weak national advertising demand, particularly in the broadcast segment. This trend is expected to continue into Q3, with revenue pacing down low double digits.
National Advertising Weakness: National advertising demand remains weak, significantly impacting both spot and network revenue streams. This is compounded by the discontinuation of partnerships with Daily Wire and Dan Bongino, which has created unfavorable year-over-year comparisons.
High Leverage and Capital Constraints: The company operates in a highly leveraged and capital-constrained environment, limiting its ability to invest in long-term growth opportunities unless they provide immediate ROI.
Secular Headwinds in Broadcast: Persistent secular headwinds in the broadcast industry are expected to continue, pressuring the company's higher-margin broadcast business and impacting EBITDA.
Inventory and Revenue Challenges: The network revenue line was negatively affected by the elimination of unprofitable inventory in 2024, a lack of high-demand sports inventory in Q2 2025, and a weak general market environment, leading to a 20% decline in this revenue stream.
Dependence on Digital Growth: While digital marketing services (DMS) revenue grew by 38%, the company has not yet reached a point where digital growth offsets declines in broadcast revenue, impacting overall financial performance.
Cost Reduction Pressures: The company has implemented significant cost reductions, including $5 million in Q2 2025, but continues to face pressure to further reduce fixed costs to mitigate revenue declines.
Regulatory and Market Risks: Forward-looking statements indicate exposure to regulatory and market risks, as highlighted in SEC filings, which could materially impact future performance.
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Guidance & Outlook
Digital Marketing Services (DMS) Growth: The company expects its DMS business to surpass a $100 million annual run rate early next year, with increasing contribution margins as economies of scale start to take effect.
Digital Revenue Growth: Total digital revenue, including DMS, is expected to continue growing, with DMS pacing up more than 35% in Q3.
Broadcast Revenue Trends: Broadcast revenue is expected to remain under pressure due to ongoing market headwinds, with total revenue pacing down low double digits in Q3.
Cost Reductions: The company plans to continue focusing on fixed cost reductions, including restructuring network sales and operations and outsourcing the traffic function, which will result in several million dollars of cost savings by 2026.
AI Integration: The company is accelerating the use of AI to create efficiencies and growth opportunities, with over 100 project ideas being prioritized for execution. AI is expected to unlock long-term value creation.
Capital Expenditures: Full-year CapEx is now expected to be below the $22.5 million guidance provided earlier.
Non-Core Asset Sales: The company expects to generate nearly $14 million from non-core asset sales by the end of the year.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Do you see national's pacing improving through the third quarter, specifically as you look to September?
A:Francisco J. Lopez-Balboa stated that there hasn't been any improvement in pacing at this point, but things can change quickly. National advertising remains lumpy and unpredictable.
Q:Are there any issues related to the decline in referral search engine traffic affecting your digital marketing services business?
A:Mary G. Berner explained that referral search is a very small part of their digital business, so the impact is minimal. Their digital marketing services focus on geo-targeting and other methods not dependent on search.
Q:Could the decline in referral search engine traffic decrease the ROI for customers in your DMS business?
A:Mary G. Berner acknowledged that it could decrease ROI but emphasized their ability to optimize campaigns and adapt their products to mitigate such impacts.
Q:Are there any key advertising categories showing signs of stabilization or improvement?
A:Francisco J. Lopez-Balboa mentioned that the top five categories are professional services, home products, automotive, financial, and entertainment, which represent 55%-60% of their business. While local spot advertising shows slight improvement, national and automotive categories remain weak. Lower interest rates could stimulate demand in categories like automotive.
Q:What is driving growth in your podcasting business?
A:Mary G. Berner highlighted three growth drivers: adding new shows, capturing audience growth across audio and video, and multi-platform ad packaging. She mentioned specific shows like the Shawn Ryan Show and The Benny Show experiencing significant growth.
Q:How should we think about the pace of OpEx declines for the remainder of the year?
A:Francisco J. Lopez-Balboa stated that cost reductions in Q2 were partly due to actions taken last year, with $10 million in fixed cost reductions. They continue to focus on cost structure optimization, including contract renewals and leveraging AI for business optimization. Incremental cost savings will likely be more modest going forward.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about the pace of national advertising improvement in Q3, citing the unpredictable and lumpy nature of national advertising without offering specific data or projections.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Balboa Executive
Berner CFO
Berner President
CEO Berner
CEO Director
CFO Frank
CFO Treasurer
Collin Jones
Conference Collin
Corporate Development
Director Kupinski
Division Conference
ET Cumulus
Executive VP
Francisco Lopez
Frank Lopez
Inc Research
Investor portion
Jones Executive
Kupinski NOBLE
Markets Inc
NOBLE Capital
Research Division
Sir today
Treasurer Berner
VP CFO
VP Corporate
Welcome conference
Westwood Francisco
conference today
filing website
link Investor
portion Welcome
CMLS Transcript
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Cumulus Media Inc. (CMLS) Q3 2025 Earnings Call Prepared Remarks Transcript
Unknown10-30
The earnings call revealed several negative aspects: declining broadcast revenue, weak national advertising, high debt levels, and potential litigation risks. Despite growth in digital marketing services and cost reductions, the overall sentiment is weighed down by these challenges. The Q&A section did not provide additional clarity or positive insights. Therefore, the stock price is likely to experience a negative movement in the short term.
Cumulus Media Inc. (CMLS) Q2 2025 Earnings Call Transcript
Unknown8-8
The earnings call reveals several challenges: a decline in total revenue, a significant drop in broadcast revenue, and reliance on digital growth that hasn't offset these declines. Despite cost reductions, financial pressures persist. The Q&A highlighted uncertainties, particularly in national advertising and ROI concerns in DMS. Although digital growth is strong, the overall sentiment is negative due to declining broadcast revenue, regulatory risks, and lack of clear guidance on future improvements. The absence of market cap information limits precise prediction, but the overall sentiment leans towards a negative outlook for the stock price.
Cumulus Media Inc. (CMLS) Q1 2025 Earnings Call Transcript
Unknown5-1
The earnings call reveals challenges: a 6.4% revenue decline, advertising pullbacks, and significant debt. Despite positive digital growth and cost reductions, macroeconomic pressures and economic uncertainties persist. The Q&A section highlights unclear management responses and market weakness, further impacting sentiment. A lack of share repurchase program and no new partnerships or optimistic guidance adjustments contribute to a negative outlook, likely leading to a stock price decline of -2% to -8%.
CMLS Report
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