Lee Enterprises, Incorporated

Welcome to the Lee Enterprises 2025 third quarter webcast and conference call. The call is being recorded and will be available for replay at investors.lee.net. At the close of the planned remarks, there will be an opportunity for questions. Participants accessing this call by webcast may submit written questions through the website and they will be answered during the call as time permits. Otherwise, you will receive a response later. A link to the webcast can be found at investors.lee.net. Now I will turn the call over to your host, Jared Marks, Vice President of Finance.

Good morning. Thank you for joining us. In addition to myself, speaking on this morning's call are Kevin Mowbray, President and Chief Executive Officer, and Tim Millage, Vice President, Chief Financial Officer, and Treasurer. Earlier today, we issued a news release with preliminary results for our third fiscal quarter of 2025. It is available at lee.net as well as major financial websites. Please also refer to our earnings presentation found at investors.lee.net, which includes supplemental information. As a reminder, this morning's discussion will include forward-looking statements based on our current expectations. These statements are subject to certain risks trends, and uncertainties that could cause actual results to differ materially. Such factors are described in this morning's news release and in our SEC filings. During the call, we refer to certain non-GAAP financial measures. Reconciliations to the relevant GAAP measures are included in the tables accompanying the release. And now to open the discussion is our President and Chief Executive Officer, Kevin Mowbray.

Thanks, Jared, and good morning, everyone. During this call, I'm pleased to share an update on our digital transformation as well as our third quarter operating results, which represented significant growth in adjusted EBITDA over Q2. We also have an important update on our management team. Nathan Becky was named Chief Operating Officer. With a strong background in strategic leadership and operational excellence, Nathan will continue to play a pivotal role in driving our digital growth and innovation. The third quarter demonstrated solid growth amid continued recovery from last quarter's cyber events. Notably, local advertising revenue trends showed meaningful improvement with the year-over-year trend favorable seven points fueled by sustained strength across our core base of 20,000 local advertisers. We launched our first market AI-powered suite in Q2. Our AI enablement program offers a full suite of AI products. Since our last update and in partnership with WeLevel, AppSite Agency has launched an expanded suite of AI-powered packages designed to drive lead capture, customer engagement, and business automation. These packages are called SmartAnswer, SmartTeam, and Smart Suite HQ, designed to provide scalable solutions for businesses at every stage from handling inbound calls to fully automating content, communications, and sales workflows. This rollout marks a pivotal step in evolving our product catalog into our portfolio of industry-leading AI tools and solutions. We expect the growth of our AI product suite to be a key catalyst for accelerating digital advertising growth as we advance towards our long-term targets. On the digital subscription front, we delivered same-store revenue growth of 16% year-over-year, driven by an impressive 28% growth in ARPU. We ended June with 670,000 digitally-only subscribers, which is down sequentially reflecting the continued residual impact from the cyber event. However, as we've said before, unit growth may not be linear quarter to quarter. Remain confident and firmly committed to reaching our long-term unit target and expect to continue driving top-line revenue growth through both unit growth and rate optimization. The progress in these revenue categories gives us confidence in our ability to drive sustainable growth and deliver long-term value to our shareholders. As a result of our three pillar digital growth strategies, expected to result in $450 million of digital revenue by 2028. After navigating the cyber event back in February, our entire team is back to full steam ahead. With an excellent foundation of $305 million annual digital revenue as of this quarter, we're confident Our strategy will achieve digital revenue of $450 million by 2028. As a testament to our three-filler digital growth strategy, we have consistently outpaced our industry peers in several key measures of digital growth, both digital subscription and digital agency revenue growth. Digital subscription revenue grew 33% over the last three years, nearly doubling the nearest industry peer. On the advertising side, anti-digital agency revenue growth has significantly outpaced our nearest competitor, growing 10% annually over the last three years. Total digital revenue was $305 million on a trailing 12-month basis. well on our way to achieving our long-term target. Our digital revenue continues to grow with an increase of 4% on a same-store basis over the prior quarter. Digital subscription revenue continued to lead the way, growing 16% year-over-year on a same-store basis. Amphidigital Agency had another solid quarter of double-digit growth as well, with an increase of 10% on a same-store basis over the prior year. Our third quarter revenue clearly demonstrates that our digital transformation is in full effect, with our digital revenue reaching 55% of our overall revenue this quarter. The strength of our core digital business is foundational to the long-term success of LEAD, but I'll add that the innovative ad products that we recently launched puts us in a position to accelerate our digital revenue growth even further. And now I'll pass it over to Tim.