USA TODAY (TDAY) Q2 2024 earnings summary

Executive summary

• Achieved strong Q2 performance with year-over-year Adjusted EBITDA growth, improved free cash flow, and net income of $13.7 million, driven by digital revenue expansion and operational execution.

• Digital revenues now represent 44% of total revenues, with all digital categories showing growth versus the prior year.

• Audience engagement reached new highs, with 185 million average monthly unique visitors and double-digit page view growth.

• Confident in meeting full-year objectives, supported by robust business pipelines, ongoing deleveraging, and strong liquidity with $99 million in cash.

• Repaid $24.3 million in debt, reducing first lien net leverage below 2.0x and total net debt under $1.0 billion.

Financial highlights

• Q2 total operating revenues were $639.8 million, down 4.8% year-over-year, with digital revenues at $278.4 million, up 6.2% and accounting for 44% of total revenues.

• Adjusted EBITDA was $74.6 million, up 4.8% year-over-year, with margin rising to 11.7%.

• Free cash flow reached $25.4 million, a sequential improvement of $15.9 million from Q1.

• Digital-only subscription revenue hit $46.3 million, up 22.3% year-over-year; ARPU rose 20% to $7.62; total digital-only paid subscriptions grew 4% to 2.03 million.

• Net income attributable to Gannett was $13.7 million, a $26.4 million improvement year-over-year.

Outlook and guidance

• Reiterated full-year business outlook, expecting continued improvement in Adjusted EBITDA, free cash flow, and digital revenue growth in the second half.

• Full year 2024 digital revenues expected to grow ~10%; 2025-2026 digital revenue growth expected to exceed 10% annually and surpass 55% of total revenues by 2026.

• Total revenues expected to decline low to mid-single digits in 2024, then return to low single-digit growth in 2025-2026.

• Expects continued year-over-year growth in digital-only paid subscriptions for Q3, aided by a new paywall strategy.

• Free cash flow CAGR projected at 30% through 2026, accelerating to 40% in 2025-2026.