Gannett Co., Inc. (GCI) Q2 2025 Earnings Call Transcript
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Overview
The earnings call presents a mixed picture: strong net income growth and debt reduction are positive, but declining total revenues and digital revenues raise concerns. The Q&A section reveals optimism about future digital subscriber growth and AI partnerships, but lacks specific data. Given the decline in total revenues and digital challenges, combined with management's optimistic but vague guidance, the stock is likely to see a neutral reaction in the short term.
Key Financial Performance
Total Adjusted EBITDA $64.2 million, reflecting a sequential increase of 27%. This improvement is attributed to operational efficiencies and cost management.
Free Cash Flow $17.6 million, representing sequential growth of 73%. This growth is due to improved operational performance and cost-saving measures.
Debt Repayment $23.4 million repaid in Q2, with close to $100 million repaid in the first 6 months. This reflects the company's focus on reducing debt.
Digital Advertising Revenues Grew 4% year-over-year, compared to a slight decline in the first quarter. This growth is driven by improved programmatic revenue and direct sales from national teams.
Digital-Only Subscription ARPU $7.79 in Q2, showing sequential and year-over-year growth. This increase is due to a more intentional acquisition strategy and pricing adjustments.
Total Revenues $584.9 million, a decrease of 8.6% year-over-year or 6.4% on a same-store basis. The decline is attributed to challenges in digital-only subscriptions and digital marketing services.
Operating Costs and SG&A Expenses Decreased approximately 8%, reflecting the company's commitment to prudent cost management.
Net Income $78.4 million in Q2, an improvement of $64.6 million year-over-year. This includes a tax benefit of $87.5 million.
Digital Revenues $265.4 million, down 4.6% year-over-year or 2.8% on a same-store basis. The decline is due to challenges in digital-only subscriptions and digital marketing services.
Digital Marketing Solutions Core Platform ARPU $2,830 in Q2, a new quarterly high, up 5.1% year-over-year. This growth is driven by improved campaign performance and customer retention.
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Operating Highlights
AI Content Licensing Agreement: Gannett announced a strategic AI content licensing agreement with Perplexity, integrating Gannett's premium content into Perplexity's AI-powered search experiences. This deal includes licensing fees and advertising revenue share.
Taboola's Generative AI Answer Engine: Gannett launched Taboola's generative AI answer engine, Deeper Dive, within USA TODAY, creating a new monetization channel and increasing reader engagement.
Digital Advertising Growth: Digital advertising revenues grew 4% year-over-year, driven by scaled audience growth and increased engagement.
Digital-Only Subscriptions: Gannett focused on high-value subscribers, leading to sequential and year-over-year growth in digital-only ARPU.
Cost Reduction Program: Gannett implemented a $100 million cost reduction program, targeting annualized expense reductions to improve EBITDA margins.
Debt Repayment: The company repaid $23.4 million of debt in Q2 and nearly $100 million in the first half of 2025.
Focus on Engagement: Gannett emphasized engagement in sports and entertainment verticals, leveraging events like the Kentucky Derby and NFL season to drive audience growth.
AI and Automation: Gannett is leveraging AI-driven automation for workflows and back-office processes to enhance operational efficiency.
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Risk or Challenges
Revenue Trends: Revenue trends are not improving at the pace needed, with total revenues decreasing by 8.6% year-over-year. Same-store revenue trends improved slightly but remain a challenge.
Cost Management: The company is implementing a $100 million cost reduction program, including closures of production facilities and reliance on automation. However, these measures indicate operational challenges and potential disruptions.
Digital Subscription Business: Digital-only subscription revenues decreased, and the company is rebuilding its subscriber base with a focus on high-value subscribers. This shift has caused short-term pain and challenges in returning to growth.
Print Revenue Decline: Print and commercial revenues continue to decline, and while efforts are being made to manage this, it remains a long-term challenge.
Debt Levels: The company has significant debt, with $1 billion in total debt and a net debt of approximately $926 million. While debt paydown is ongoing, it remains a financial risk.
AI and Technology Investments: The company is investing in AI-driven automation and partnerships, but these initiatives are early-stage and may take time to yield significant results.
Advertising Revenue: While digital advertising revenues returned to growth, the broader advertising marketplace remains a challenge, and growth is not yet at the desired pace.
Economic and Market Conditions: The company faces challenges from broader economic and market conditions, impacting revenue and operational performance.
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Guidance & Outlook
Same-store digital revenue growth: Expected growth between 3% and 5% year-over-year in the second half of 2025.
Total adjusted EBITDA: Meaningful growth expected compared to the prior year, with full-year 2025 growth over 2024 and continued expansion into 2026.
Free cash flow: Projected growth of over 100% versus the prior year in the second half of 2025.
Cost reduction program: Targeting approximately $100 million in annualized expense reductions, with most efficiencies implemented by the end of Q3 2025.
Digital-only subscription revenue: Sequential improvement expected in Q3 and Q4 2025, with a focus on high-value subscribers and ARPU growth.
Digital revenue share: Expected to represent nearly 50% of total company revenue by year-end 2025.
Total same-store revenues: Projected to decrease in the low to mid single-digit range for 2025, with low single-digit declines in the second half, positioning for flat revenue in early 2026.
Debt paydown: Increased expectation to $135 million for 2025.
Digital advertising: Growth expected to accelerate in the second half of 2025, leveraging the USA TODAY brand and national sales organization.
AI and technology initiatives: Strategic alliances and AI-driven automation expected to enhance operational efficiency and create new monetization channels.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:When do you think your revenues will turn flat?
A:Revenues are expected to turn flat in the early stages of 2026.
Q:Can you provide any more details around the cost reduction program in terms of what kind of things you might be reducing or cutting back on?
A:The cost reduction program focuses on automation, outsourcing, and eliminating duplication in the organization. Specific actions include shuttering two large print facilities, moving some products to mail delivery, and leveraging AI for process improvements. Payroll adjustments will also be a component.
Q:What has been your experience with AI search and Google AI search not sending traffic back to content sites?
A:Despite the backdrop, the company continues to grow its digital audience, generating at least 1 billion page views per month. They are diversifying traffic sources by focusing on platforms like Facebook, Instagram, Reddit, and Threads, and using technology to block unauthorized scraping from AI bots. Partnerships like the one with Perplexity ensure compensation and attribution for content.
Q:Are there any updates on the ad tech antitrust case with Google?
A:The ad tech cases are progressing positively. The DOJ ruled in favor of publisher-facing conduct claims, and a remedies hearing is scheduled for September with a ruling expected later this year. The Texas case trial is pushed to Q4, and the company's own case is expected to go to trial in 2026.
Q:When do you think you'll return to year-over-year growth for digital subscriber revenue?
A:The company expects sequential growth in digital subscriber revenue in Q3 and Q4 of this year, with overall growth anticipated next year.
Q:Are you seeing any trends or changes in discussions or the willingness of AI platforms to negotiate potential AI content partnership deals?
A:There is a momentum shift towards publishers, with technology companies supporting fair licensing of content and blocking unauthorized scraping. Partnerships like those with Snowflake and Perplexity are examples of this trend. More deals are expected over the next 12 months.
Q:Can we dig in on the factors driving digital advertising revenue growth?
A:Digital advertising revenue growth is driven by consistent page view growth, the strength of the national brand, and a shift in the advertising ecosystem back towards journalism. The company is also benefiting from its wide audience reach and brand-safe platform.
Q:What is happening with the DMS business strategy?
A:The DMS business is improving through product enhancements like AI smart bidding, CRM integration, and the Dash voice agent. The company is expanding its expertise in verticals and aligning media and DMS sales teams to increase reach and scale.
Q:Is the impact of Google's changes on affiliate revenue in the rearview mirror?
A:Yes, the impact is largely in the rearview mirror. The company is focusing on new partnerships like AddressUSA, which offer greater opportunities than previous affiliate deals.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact timeline or metrics for certain initiatives, such as the precise financial impact of the cost reduction program or the expected revenue from new AI partnerships. Additionally, while optimistic about trends in digital advertising and DMS, the responses lacked granular data or examples to substantiate claims of improvement.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI answer
ARPU retention
Deeper Dive
Entertainment
LLC Research
Perplexity AI
President
Research Division
Smart
TODAY NETWORK
USA TODAY
agreement AddressUSA
answer engine
approach
audience experience
beta
brand
campaign
consumer
content USA
cost reduction
football
hand
intent
network
news
page
position improvement
power
reduction program
shift
subscriber value
technology
topic
value advertising
yesterday
GCI Transcript
Gannett Co., Inc. (GCI) Q3 2025 Earnings Call Transcript
Unknown10-30
The earnings call presents a mixed picture: positive elements include a favorable ruling in the Google antitrust case, debt reduction, and strong digital advertising growth. However, digital revenue declined, and there's uncertainty around AI partnerships and OpenAI negotiations. The shift of revenue drivers to Q4 and incremental expenses from the cost reduction program further complicate the outlook. With no clear market cap, the impact remains uncertain, but the balance of positives and negatives suggests a neutral stock price movement.
Gannett Co., Inc. (GCI) Q2 2025 Earnings Call Transcript
Unknown7-31
The earnings call presents a mixed picture: strong net income growth and debt reduction are positive, but declining total revenues and digital revenues raise concerns. The Q&A section reveals optimism about future digital subscriber growth and AI partnerships, but lacks specific data. Given the decline in total revenues and digital challenges, combined with management's optimistic but vague guidance, the stock is likely to see a neutral reaction in the short term.
Gannett Co., Inc. (GCI) Q1 2025 Earnings Call Transcript
Unknown5-1
The earnings call reveals a decline in total operating revenues and digital revenues, alongside significant debt, leadership changes, and high customer churn. Despite optimistic guidance and a share repurchase program, these negative factors, along with unclear management responses in the Q&A, suggest a negative sentiment. Without a market cap, the impact on stock price is uncertain, but the overall financial and strategic challenges point towards a negative outlook.
Gannett Co., Inc. (GCI) Q3 2024 Earnings Call Transcript
Positive10-31
The earnings call shows strong digital revenue growth, improved EBITDA margins, and strategic asset sales aligning with long-term goals, despite a decline in total operating revenues. The Q&A session highlights management's confidence in future growth and successful partnerships like the Microsoft deal. Although some concerns about asset sales timing exist, the overall sentiment is positive, with management optimistic about 2025. The lack of guidance changes and no major negative announcements suggest a positive stock price movement over the next two weeks.
GCI Slides
GCI Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
