Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Our performance this year has reinforced our confidence in our digital-first local media strategy and our deliberate focus on markets outside the top 50 cities in the United States and the long-term profitable growth potential of our digital platforms |
| Our net leverage remains below prior year levels and we have efficiently repurchased both debt and equity this year while maintaining a high yielding dividend, delivering attractive current returns to our shareholders |
| And as I shared with Michael, just really pleased with the team there and the prospects as we go forward |
| Of particular note is how our business model allowed for industry-leading digital advertising revenue and profit growth for the first nine months of the year, while also generating consistent meaningful cash flow |
| We're very pleased to share with you that our third-quarter results met our previously issued revenue and profit guidance despite the challenging macro environment |
| And obviously, our digital advertising has and continues to be differentiated in driving and propelling our growth for the last several years |
| And that's why you will note less subscribers lost in Q3 versus Q2, which we expect will translate to improved revenue and subscriber metrics in 2024 |
| But obviously, excited for 2024 for all the reasons we just talked about, improved pacing, and broadcast, digital advertising comes back here in the back half of the year for TSI, and what I just mentioned was broadcast having more on books for Q1 at this point than last year, which is if that holds, that's a very positive development |
| These changes led to a meaningful increase in call answer rates, enhanced visibility to customer requests and concerns, and improved response times |
| Yeah, we're tremendously excited |
| We've made a tremendous amount of improvements, I think, to our processes and procedures as well as added some incremental tools that we believe and are confident will return us to growth in 2024 |
| But in our view, that is a very, very, very positive sign for Q1 |
| With an addressable market of nearly 9 million target customers, as outlined on slide 14, a superior product offering, a customer service team and model built for future growth, and a significant market opportunity, I am very confident that Townsquare Interactive is geared for long-term profitable growth and success |
| Through careful expense management and thoughtful investment, we are very pleased to share that we were able to maintain a very strong 28% profit margin in Q3, in line with Q2's profit margin as well as Q3 2022's profit margins |
| Third-quarter broadcast profit margins sequentially improved to 31% as compared to 27% in the second quarter |
| And we remain incredibly excited about the growth potential for this business |
| Even more impressive is that 57% of our total profit was digital profit in the same period, which represents a healthy 30% profit margin |
| Most importantly, I think our service model is being improved and continues to be improved |
| Our mature cash cow broadcast advertising platform has and continues to generate a solid profit contributing to our strong cash generation |
| I am proud that despite these challenges, our differentiated digital advertising platform delivered double-digit revenue and profit growth through the first nine months of 2023 |
| Yet according to Miller Kaplan, our total broadcast share in the markets in which we are measured by Miller Kaplan, increased by 50 basis points over the same period, driven by gains in our local broadcast share |
| And the fact that we can marry this programmatic side of our -- Ignite, our digital advertising with a huge large-scale owned and operated websites and mobile apps that give us incredibly valuable first-party data, which gives us audio insights and allows us to audience target, I think, more effectively than anybody in our size markets really is the reason I think that our digital advertising not only in Q3 year to date, but for the last several years has outperformed the industry |
| At the same time that we are gaining broadcast share, we are also experiencing market share gains in our digital business |
| We believe our strong cash flow characteristics will allow us to continue to invest in our businesses, supporting the dividend, and give us flexibility to opportunistically pursue debt and share repurchases in the open market |
| In fact, one of the largest areas of growth in the digital advertising industry today is streaming or connected TV, which also happens to be a strong growth driver of our digital programmatic revenue stream |
| And that's why when you look at digital overall being 52% of our revenue, which is two times the average in the industry and 57% of our profits, we're tremendously excited |
| although Townsquare is steadily increasing our digital market share each year, we are still only capturing roughly 14% of the total obtainable digital revenue in our local markets, signifying meaningful upside that we are very confident we can capture |
| As Bill highlighted and I would again like to emphasize, we consistently have strong cash flow generation |
| Townsquare Ignite, our digital advertising segment, was again a growth driver for the company with net revenue increasing 5.5% year over year in the third quarter and digital advertising profit increasing 6.3% year over year |
| Margins were strong at approximately 28% in the third quarter and in line with the third-quarter 2022 margin |
| Statement |
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| Third-quarter net revenue declined 4.6% year over year to $115.1 million, which was within our guidance range of $115 million to $117 million |
| Townsquare Interactive's target clients, generally the smallest of the SMBs with less than 20 employees and less than $5 million in annual revenue, continue to struggle with inflationary and wage pressures, labor shortages, and higher interest rates |
| Third-quarter broadcast advertising net revenue decreased in line with expectations with the decline of 8.6% year over year and 7.2% excluding political |
| As in general, sales velocity is suppressed in Townsquare Interactive because of the environment that I just talked Michael through, including student loans coming back and higher interest rates and all of those things |
| In the third quarter, net revenue decreased 12.6% as compared to the prior year, and profit decreased 10.6% year over year |
| Third-quarter adjusted EBITDA declined 12.1% year over year to $27.2 million, which was within our guidance range of $27 million to $28 million |
| As anticipated, third-quarter revenue for Townsquare Interactive, our subscription digital marketing solutions offering outlined on slide 13, declined negative 13% year over year |
| Through the first nine months of the year, our Broadcast revenue declined negative 5% year over year, excluding political |
| Although revenue at Townsquare Interactive, as expected, declined negative 13% in the third quarter, and we expect a similar rate of decline in the fourth quarter |
| As we have shared previously, we expect margins at Townsquare Interactive to be suppressed in the second half of 2023 as we continue to invest for future growth, given our confidence in our long-term growth prospects and while we ramp the newly opened Phoenix location |
| Quite honestly, from an overall company perspective, when you look at the guidance that Stu provided, Q4 net revenue down, ex-political negative 5% to negative 6%; Q3 was negative 4% |
| So just as a recap for everyone on the call, as Michael is asking about national -- Q1 national broadcast advertising was down 28% |
| The third-quarter impairment charge was caused by rising interest rates, which caused the discount rate in our calculations to increase by approximately 60 basis points from Q2 as well as decreases in the third-party broadcast revenue forecasts and higher initial capital costs due to rising prices, all of which are inputs in these valuations |
| Given the inflationary pressures, the wage pressures, the higher interest rates, the impact on capital, their business are really suffering |
| Our third-quarter net income declined from $2.8 million in 2022 to a net loss of $36.5 million or $2.27 per share |
| Excluding political, third-quarter net revenue declined 3.8% |
| And we have definitely heard that, particularly in the last five to six weeks from our client base, some of the people who are coming -- calling us with concerns as it relates to their cash flow |
| After July's promising start to the third quarter, as you are aware, the US advertising industry experienced a slowdown |
| All of these factors have contributed to elevated churn rates among our clients' subscriber base and moderately slower sales velocity |
| Q3 was still down negative 19% |
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