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 digital-only subscription revenue and ARPU reaching new highs and a return to year-over-year growth in digital-only paid subscriptions.

• Continued deleveraging, with first-lien net leverage dropping to 1.9x and total net debt falling below $1 billion for the first time since 2019.

• Strategic focus on audience engagement, personalized content, diversified monetization, and AI-powered solutions.

• Maintained strong liquidity with $98.9 million in cash at quarter-end.

Financial highlights

• Q2 2024 total revenues were $639.8 million, down 4.8% year-over-year, with digital revenues up 6.2% to $278.4 million, now 44% of total.

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

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

• Free cash flow was $25.4 million, up $15.9 million sequentially from Q1.

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

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 of 2024.

• Digital revenues expected to grow ~10% in 2024 and exceed 10% annually in 2025-2026, surpassing 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.

• Net income and adjusted EBITDA expected to improve, excluding a ~$46 million impairment charge from Q1 2024.

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