Gannett Co., Inc. (GCI) Q3 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Adjusted EBITDA $62.9 million, an increase of 5.6% year-over-year due to improved revenue trends and strategic cost controls.
Total Operating Revenues $612.4 million, a decrease of 6.2% year-over-year, impacted by the closure or divestiture of certain businesses.
Same-store Revenues Declined 5.3%, but improved by 310 basis points over last year's Q3 revenue trend.
Total Digital Revenues $277.4 million, an increase of over 500 basis points year-over-year, accounting for 45.3% of total revenues.
Digital-only Subscription Revenue $50.1 million, growing 25% year-over-year.
Digital-only ARPU $8.16, increasing approximately 20% year-over-year.
Adjusted EBITDA for Domestic Media Segment $46.3 million, up 13.6% year-over-year.
Adjusted EBITDA Margin 10.3%, compared to 9.1% in the prior year quarter.
Cash Provided by Operating Activities $33.7 million, an increase of $13.1 million year-over-year.
Free Cash Flow $19.8 million, representing a significant increase of 168% compared to the prior year.
Net Debt $959.6 million, with a first lien net leverage of 1.76x.
Core Platform ARPU Approximately $2,800, representing an increase of 5.3% year-over-year.
Adjusted EBITDA for Newsquest Nearly $14 million, up 3% over the prior year.
Adjusted EBITDA Margin for Newsquest 23.4%, an increase of 50 basis points year-over-year.
Total Debt Approximately $1.06 billion, with $28.5 million repaid in Q3.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Digital-Only Subscription Revenue: In Q3, digital-only subscription revenue surpassed $50 million, marking a 25% increase year-over-year.
AI-Powered Solution (Dash): The AI-powered solution, Dash, launched four months ago, has shown good demand and positive customer feedback.
Partnership with BetMGM: A new partnership with BetMGM was launched to provide sports betting odds and insights, enhancing content monetization.
Audience Growth: Gannett's audience surpassed 200 million average monthly unique visitors, reflecting a 7% growth year-over-year.
Digital Revenue Growth: Total digital revenues accounted for 45% of total revenues, an all-time high.
DMS Business Trends: Preliminary figures show improvement in advertising spending rates in October, indicating a potential rebound.
Free Cash Flow: Generated approximately $20 million of free cash flow, a 168% increase compared to the prior year.
Adjusted EBITDA: Adjusted EBITDA totaled approximately $63 million, growing nearly 6% year-over-year.
Cost Management: Operating costs decreased by 9.7% compared to the prior year.
Debt Refinancing: Completed debt refinancing transactions that extended maturity runway and simplified capital structure.
Focus on Digital Monetization: A diversified monetization strategy is being implemented to maximize revenue opportunities across the audience.
AI Strategy: Leveraging AI to enhance operational efficiency and develop strategic partnerships.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Revenue Trends: Total revenue was lower than expected due to the sale and unwind of non-strategic businesses and softer trends in Newsquest and DMS segments.
Advertising Spend: A cautious sentiment was expressed by larger advertisers in the home services vertical, leading to a contraction in advertising spend rates due to economic uncertainty.
Economic Factors: The advertising spend rates were affected by the Federal Reserve's economic uncertainty and the cyclical nature of the home services vertical.
Debt Management: The company completed a debt refinancing that extended maturities and reduced potential future share dilution, but this may lead to an increase in first lien net leverage.
Market Competition: The company faces competitive pressures in the digital marketing solutions sector, which may impact revenue growth.
Regulatory Issues: No specific regulatory issues were mentioned, but the overall economic environment and its impact on advertising could suggest potential regulatory challenges.
Supply Chain Challenges: No specific supply chain challenges were mentioned, but the economic uncertainty may indirectly affect supply chain dynamics.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Adjusted EBITDA: In Q3, adjusted EBITDA totaled approximately $63 million, growing nearly 6% year-over-year.
Digital Revenue Growth: Three out of four digital revenue categories saw strong growth, with total digital revenues surpassing 45% of total revenues.
Digital-Only Subscription Revenue: Digital-only subscription revenue surpassed $50 million, with digital-only ARPU climbing above $8.
Partnership with BetMGM: Launched a partnership with BetMGM to enhance monetization of sports content.
Debt Refinancing: Completed debt refinancing transactions, extending maturity runway and simplifying capital structure.
AI Initiatives: Announced partnership with Microsoft for AI summarization, with expectations for increased revenue streams.
2024 Total Digital Revenue Growth: Updated expectation for total digital revenue growth to 6% to 7%.
2024 Free Cash Flow: Updated free cash flow guidance to reflect the impact of Q4 debt refinancing.
Revenue Inflection Point: Revenue inflection point anticipated to come later than expected, but total revenue growth projected for 2025.
First Lien Net Leverage: Targeting first lien net leverage below 1x.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Free Cash Flow: In Q3, Gannett generated approximately $20 million of free cash flow, representing a significant increase of 168% compared to the prior year.
Debt Repayment: In Q3, Gannett repaid $28.5 million of debt, which combined with adjusted EBITDA growth, reduced first lien net leverage to 1.76x.
Debt Refinancing: Subsequent to the end of Q3, Gannett completed a comprehensive debt refinancing that extended the maturities of virtually all first lien debt to 2029 and reduced potential future share dilution by approximately 46%.
Digital-Only Subscription Revenue: In Q3, digital-only subscription revenue reached a new high of $50.1 million, growing 25%.
Digital-Only ARPU: Digital-only ARPU climbed above $8.16, increasing approximately 20% compared to the prior year.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:How do you think the growth in monthly active users, surpassing 200 million, will impact your business?
A:We're very pleased to see a 200 million number in the third quarter, which exceeded our expectations. The scale of our audience reflects the total addressable market and opportunity. Engagement is even more important as it drives enhanced monetization. As engagement grows, we can further customize our offerings, which will create a relevant journey for our monthly uniques. Audience and engagement are leading indicators for improved revenue trends in 2025.
Q:What are your thoughts on the assets sold this year and their revenue and EBITDA contributions?
A:We made decisions to shutter or sell various businesses that did not fit our long-term strategy. We expect about $65 million in annualized top line from these actions, with minimal EBITDA impact. We've completed about $20 million in asset sales year-to-date and have a number of deals in the pipeline, though timing may shift into 2025.
Q:Can you provide more color on the sector trends in BMS?
A:The home renovation and improvement category was muted in Q3 due to heightened interest rates and lagging home sales. However, we see this as temporary and expect increased spending from larger customers in home services due to recent rate cuts. We have internal actions underway to improve retention and client success.
Q:What are the expectations for revenue growth in 2025?
A:We're confident in hitting an inflection point in the first half of 2025, with full year revenue growth expected over 2024. Audience engagement is driving positive momentum, and our digital pricing strategy is effective. We expect to see growth in digital advertising, subscriptions, and partnerships.
Q:What is the update on the DOJ case against Google?
A:We believe the DOJ presented a strong case against Google's monopolistic behavior. Closing arguments are scheduled before Thanksgiving, with a decision on liability expected by year-end. The ad tech case by Texas and other states is set to begin in March.
Q:What was different about the Microsoft deal compared to other AI companies?
A:The Microsoft deal allowed us to understand the use of our content and the value we were getting. It’s a narrow use of our content but a good example of the partnerships we’re looking to strike. We expect to continue announcing deals as we go forward.
Q:How much of the 203 million monthly uniques is due to the election cycle?
A:The vast majority of our uniques are not related to politics. We have seen a boost in political readership, but our growth is based on expanding other segments of our readership base, making large news events additive.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the specific revenue and EBITDA contributions from the sold assets, as well as the exact timing of future asset sales, indicating that it may flex into 2025 without providing concrete details.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
BetMGM
DOJ
Google
Microsoft deal
Olympics
ability
ad tech
audience result
behavior
case
client
cycle
date
debt refinancing
decision
dilution
disaster
election
environment
example
fact
home
improvement category
indicator
inflection point
maturity
nation
news
note
page view
partner
rate cut
reason
scale
sector
source
spending
state
success
timing
transaction
uniques
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.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
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.
