Cumulus Media Inc.

Welcome to the Cumulus Media Quarterly Earnings Conference Call. I'll now turn the call over to Colin Jones, Executive Vice President of Strategy and Development and Vice President of Westwood One. Sir, you may proceed.

Thank you, Operator. Welcome, everyone, to our first quarter 2025 Earnings Conference Call. I'm joined today by our President and CEO, Mary Berner, and our CFO, Frank Lopez-Balboa. Before we start, please note that certain statements in today's press release and discussed on this call may constitute forward-looking statements under federal securities laws. Actual results may differ materially from the results expressed or implied in forward-looking statements. These statements are based on management's current assessments and assumptions, and they're subject to a number of risks and uncertainties, as discussed in our filings with the SEC. In addition, we will also use certain non-GAAP financial measures. We believe the supplementary information is useful to investors, although it should not be considered superior to the measures presented in accordance with GAAP. A full description of these risks, as well as financial reconciliations to non-GAAP terms, are in our press release and SEC filings. And the press release can be found in the investor relations portion of our website. And our Form 10-Q was also filed with the SEC shortly before this call. A recording of today's call will be available for about a month via a link in the investor portion of our website. With that, I'll now turn it over to our President and CEO, Mary Berger. Mary?

Thanks, Colin, and good morning, everyone. In Q1, despite a macro environment that became more challenging since our last earnings call, our revenue was in line with pacing guidance. The imposition of sweeping tariffs in conjunction with ongoing government spending cuts has resulted in supply chain concerns, inflation pressures, and worsening consumer sentiment, all of which have further clouded the outlook for consumer demand and contributed to pullback in advertising spending. I'll discuss those impacts, particularly in some of our key advertising categories later in the call. However, despite that backdrop, what hasn't changed since our last call is how we are responding to mitigate the impacts of the macro environment and how we are getting more out of the assets we have. Specifically, we continued to heavily focus on our digital businesses, in particular, on our digital marketing services business, which is up 30% during the quarter, an acceleration of Q4's growth rate that has continued to build in Q2. We continue to hone our broadcast go-to-market tactics, leveraging our entire platform to maximize opportunities to sell across various markets. To that end, despite the macro challenges, we increase both revenue and rating share across our large markets and network business. And we continued to drive cost efficiencies and executed $7.5 million of additional annualized net fixed cost reductions. In parallel, we remain committed to fundamentally transforming the way we use and leverage our key assets, which include a massive megaphone that reaches 92% of the country and 250 million listeners every month, which, for example, we're using to partner with nontraditional parties who are looking to tap into our vast audiences. An ability to walk product into the door as delivered by our almost 400 locally embedded sales professionals and establish relationships with approximately 30,000 local and national businesses who are natural customers for new products we develop, both of which were key elements of the strategy driving the growth trajectory of our DMS business. An audio-first multi-platform content engine, that creates monetizable content in an almost endless variety of formats from snackable social clips and short and long-form audio to daily podcast highlights and binge-worthy weekly rewinds. And an extensive, constantly growing library of premium audio content that can be redeployed and monetized in multiple ways, like the partnership, albeit small to start, that we created with a major tech platform to leverage AI to create automated new content from our audio library for distribution through our websites, apps, and social feeds to grow monetizable impressions. Turning to our first quarter performance, our digital businesses, which to remind you, have been profitable from day one, in aggregate grew 6% year over year, even with the loss of our daily wire relationship, underscoring the fact that our efforts to drive digital growth continue to pay off. Specifically, with respect to DMS, which remains our fastest growing business overall, Revenue was up 30% in the first quarter, driven by growth in total customers, up 41%, average campaign order size up 16%, and improvement in customer retention. Our ongoing improvement in these metrics reflects the power of our approach to the DMS market. By leveraging our extensive client relationships and the face-to-face access of our fully embedded local sales teams, we outperform industry benchmarks by an average of 25%. And given the strength of our competitive positioning and our upside potential, we are continuing to invest in additional product improvements and enhanced capabilities. All in all, this business is firing on all cylinders. With significant runway still ahead of us in this market, we anticipate that our DMS business alone will grow from its current revenue run rate of nearly 70 million to over 100 million plus run rate by the end of next year. Moving to podcasting, excluding the negative comp from Daily Wire, we were up close to 40%. However, with the Daily Wire included, we were down 13%. And as I mentioned on our last call, we will have an additional negative comp starting in Q2, reflecting Dan Bongino's appointment as Deputy Director of the FBI. That said, we replaced Dan with Vince Colonese on both radio and the podcast shows. Vince is a popular Washington, D.C.-based radio host from WMAL-FM and editorial director of the conservative daily news publication, The Daily Caller. We're very pleased with how Vince has performed so far. The radio show relaunched with over 250 affiliates, including six of the top ten markets, while the podcast finished the month of March 3rd in the top podcasts as measured by weekly average downloads. This resulted in revenue from the show exceeding internal expectations. Streaming, our third digital business, was up 4% during the quarter. As mentioned on prior calls, we brought the sales function for streaming completely in-house last year, replacing an outsourced fixed-rate sales contract. This move is already benefiting us as it is allowing us to better manage and optimize the monetization of our streaming impressions. In our broadcast business, as I mentioned, the negative impacts of new tariffs and government spending cuts on the economy and consumer demand continue to weigh heavily on advertisers. We experienced pullbacks across several key advertising categories, including automotive, retail, and CPG, with the impacts felt both on the local and national sides. That said, though consumer sentiment has worsened, there were some positive categories in the quarter, including in the insurance and the financial categories. As we continue to take advantage of demand opportunities when and as they occur, For example, capitalizing on the enthusiasm for our premium sports content, including the NFL and NCAA, which allowed us to achieve all-time revenue highs in the NFL playoffs and Super Bowl. Another way we are enhancing how we sell our broadcast assets is through the expansion of our beyond home market business, which was up 48% in the quarter, following fourth quarter year-over-year growth of 45%. With in-market sales teams in 84 markets, we can walk our portfolio of broadcasts and digital products through the door, providing a one-stop shop solution for the creation, execution, and ongoing optimization of multi-platform, multi-market campaigns for clients across all their locations. We are also seeing a positive impact from our emphasis on live and local programming and continue to see its ability to drive ratings and revenue as listeners and local advertisers value, the trust created with local on-air personalities who are very involved in their communities. To that point, we have seen across numerous markets that where we have a higher concentration of live and local programming than our competitors, we are outperforming them from a rating share perspective. Unsurprisingly, given the difficult broadcast environment, we continue to focus on fixed cost reductions. During the quarter, we cut $7.5 million of annualized net fixed costs, which will be recognized through the balance of 2025. Those actions are on top of the $163 million of fixed cost reductions, or 27% of our 2019 fixed cost base that we've made since then. Additionally, we've been exploring numerous ways to use AI, and today we are deploying it across a variety of functions within the company. For instance, our sales organization is creating more effective and efficient advertising proposals by using AI voice cloning to create sample commercials in seconds. And we have implemented AI chat box across our various e-commerce websites to improve customer service. These are just two examples of the ways we are starting to use AI to become more efficient and cost-effective. Moving to the balance sheet, While the first quarter is seasonally our low point in revenue and cash generation, our aggressive working capital management allowed us to maintain ample liquidity with $53 million of cash on hand plus an undrawn ABL. As we move forward, we will continue our focus on increasing operating efficiency while still supporting our various growth initiatives across both digital and broadcast. From a balance sheet perspective, our focus will remain on net debt reduction and utilizing cash generated from operations and the monetization of non-core and non-EBITDA producing assets. Looking ahead and reflecting the ongoing economic uncertainty impacting our advertising clients, pacing is down approximately 10% or 5% ex-political, ex-daily wire and net of the Bongino impact. Before turning it over to Frank, I want to remind you that we recently released our proxy. It reflects our extensive shareholder engagement efforts since last year's annual meeting and the implementation of numerous governance and compensation changes in response to shareholder feedback, and we encourage you to read it. With that, I'll turn the call over to Frank. Frank?