iHeartMedia, Inc.

Hello, thank you for standing by. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the iHeartMedia Q1 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during that time, please press star 1 on your telephone keypad. I would now like to turn the conference over to Mike McGinnis, Head of Investor Relations. You may begin.

Good morning, everyone, and thank you for taking the time to join us for our first quarter 2024 earnings call. Joining me for today's discussion are Bob Pittman, our Chairman and CEO, and Rich Bressler, our President, COO, and CFO. At the conclusion of our prepared remarks, management will take your questions. In addition to our press release, We have an earnings presentation available on our website that you can use to follow along with our remarks. Please note that this call may include forward-looking statements regarding our financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings. Additionally, during this call, we will refer to certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures are included in our earnings release, earnings presentation, and our SEC filings, which are available in the investor relations section of our website. And now I'll turn the call over to Bob.

Thanks, Mike, and good morning, everyone. We're pleased to report that our first quarter 2024 results were in line with our previously provided adjusted EBITDA and revenue guidance ranges. As expected, we saw February and March improve over the January pace of business. Although the marketplace continues to be dynamic with a changing outlook on interest rates, inflation trends, and global and domestic uncertainty, we remain confident that this is a recovery year, highlighted by the strong momentum in our podcast business and the sequential improvement of our multi-platform groups' year-over-year adjusted EBITDA performance. We also see material upside from political advertising in the back half of the year and the benefit of our ongoing focus on cost efficiencies as well. Now let me take you through some of the key financial results of the quarter. In the first quarter, we generated adjusted EBITDA of $105 million. In the middle of the guidance range, we provided of $100 to $110 million. Our consolidated revenues for the quarter were down 1.5% compared to the prior year quarter, within the guidance range of flat to down 2%. Our Q1 free cash flow is negative $81 million, a significant improvement compared to the negative $133 million in the prior year. As a reminder, Q1 is our seasonal low point for free cash flow in the year, and we will generate positive free cash flow in each of the remaining quarters in 2024, with each quarter increasing sequentially. We anticipate our full-year free cash flow to be significantly higher than last year. Turning now to our individual operating segments. The Digital Audio Group generated first quarter revenues of $239 million, up 7% versus prior year, and represented 30% of the company's total revenue. For the quarter, the digital audio group generated adjusted EBITDA of $68 million, up 26% versus prior year. The digital audio group's adjusted EBITDA margins were 29%, up from 24% in Q1 2023, marking the digital audio group segment's highest Q1 EBITDA margin ever. Within the digital audio group, our podcast revenues grew 18% versus prior year. Podcasting continues to be the hottest new consumer medium, and we are the leader in that medium in every key metric, audience, revenue, and earnings. Podcasting remains a strong growth engine for the company, and our financial discipline and podcasting expenses continues to pay off as our podcasting EBITDA margins remain accretive to our total company adjusted EBITDA margins. In March, iHeart was once again ranked the number one podcast publisher in the U.S., with more monthly downloads than the next two largest podcast publishers combined, according to PodTrack. Our leadership position in podcasting is in part the result of the power of our broadcast radio assets. As a reminder, we've used those assets to build not only the podcast business, but also the iHeartRadio app, which is the number one digital radio service, and our marquee live events business, which includes the recent iHeartRadio Music Awards and the iHeart Country Festival. In addition to our industry-leading podcast business and our digital radio streaming service, which has five times the listening of our closest competitor, we also have the largest social footprint of any audio service by a factor of seven, and we operate 3,000 national and local websites that reach more than 110 million people in the United States each month. all of which represent additional opportunities for our advertising partners to interact with our highly engaged consumer base and provide additional revenue growth for the company. Turning now to the multi-platform group, which includes our broadcast radio, networks, and events business. In the first quarter, revenues were $493 million, down 6.7% versus prior year and down 7.6%, excluding the impact of political advertising. Adjusted EBITDA was $77 million, down 11.3% versus prior year, and this represents a substantial sequential quarterly adjusted EBITDA improvement from down 38% year-over-year in Q4 2023. iHeart continues to be ranked number one in radio audience in more markets than the next two largest radio companies combined, and our events business continues its strong momentum. For example, the iHeartRadio Music Awards generated 84 billion social impressions. three times more than the Super Bowl, and 2.3 times more than the Grammys. And we've continued to make meaningful progress in the development of our programmatic platforms that enable the automated buying, selling, and planning of our broadcast radio inventory, which give our broadcast radio inventory exposure to the digital TAM. Looking at the business as a whole, we had our first quarter of year-over-year adjusted EBITDA growth in five quarters, driven by the substantial sequential year-over-year improvement in the performance of all of our segments, the multi-platform group, the digital audio group, and the audio and media services group, positive indicators of a recovery year. In addition to continuing to build out our business and develop new consumer and revenue opportunities, our management team remains focused on expense management, driving efficiencies, and structuring our business using technology, including AI, for long-term profitability and to maximize shareholder value. And now I'll turn it over to Rich.