Audacy

Good morning and welcome to Odyssey's second quarter 2021 earnings release conference call. All participants will be in listen-only mode. This conference is being recorded. I would now like to introduce your first speaker for today's call, Mr. Richard Schmeling, CFO and Executive Vice President. Sir, you may begin. Thank you, Rob.

Welcome to Odyssey's second quarter earnings conference call. This call is being recorded. A replay will be available shortly after the conclusion of today's call. at the replay link or number noted in our release. During this call, the company may make forward-looking statements which are based upon the company's current expectations and involve risks and uncertainties. The company's actual results could differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially are described in the risk factor section of the company's annual report on Form 10-K As such, risks and uncertainties may be updated from time to time in the company's SEC filings. We assume no obligation to update any forward-looking statements except as may be required by law. During this call, we may make reference to certain non-GAAP financial measures. We refer you to the Investors page of our website at odysseyinc.com for reconciliations of such measures and other pro forma financial information. With that, I'll turn it over to David Fields, President and CEO.

Thank you, Rich. Good morning, everybody, and thanks for joining Odyssey's second quarter earnings talk. I am pleased to report a very strong and successful quarter of progress at Odyssey as we significantly accelerated our recovery from the pandemic and at the same time continued to implement important transformational changes across the organization to enhance our future growth and opportunities. Starting with the financial highlights, revenues grew 73% over the prior year, Our growth was led by a near doubling of our spot radio advertising in second quarter, posting a 98% increase over the prior year. At the same time, we generated a 41% increase in digital advertising and a 23% increase in network radio advertising over prior year. We are in the midst of another strong quarter of sequential progress in Q3. We expect third quarter revenues to grow about 10% from second quarter 2021 levels. and by about 25% over prior year. July 2021 finished 27% above July 2020. Rich will provide some additional color on current business conditions and our expectations for third quarter. As we look ahead to next year, we believe we are on our way back to a full recovery of our pre-pandemic 2019 EBITDA in calendar 2022, as we noted on our last earnings call. And with the expanded breadth of growth opportunities that we have seeded, through our various acquisitions and growth initiatives, we believe we are well positioned to compete and accelerate our top line and bottom line performance across our various businesses in the years ahead. We are fundamentally enhanced and stronger company today versus who we were just a couple of years ago. Our acquisitions of Cadence 13, Pineapple Street Studios, the QL Gaming Group, and Podcorn, and our development of the Odyssey streaming platform, along with our numerous growth investments and partnerships, have greatly enhanced our ability to capitalize on broader advertising trends, augment our product line, and better serve our listeners and customers. Reflecting that transformation, we began the quarter with a total rebranding of the company, leaving behind the old brands and reintroducing ourselves as Odyssey, a new name that better reflects the company we have built and where we are headed. Today, we are a leading multi-platform audio content and entertainment company with scaled audience reach, and an important leadership position across the full spectrum of the dynamic and growing audio market, including broadcasting, podcasting, digital, network, events, music, news, and sports. During the quarter, we made important strides forward in elevating our podcasting, sports betting, digital audio, and radio businesses while planning the resumption of our events business. I'd like to share a number of recent developments and highlights along with some additional color on these recent achievements. First, we are encouraged by the current pace at which we are writing business. To a great extent, earnings reports are a trailing indicator reflecting the aggregation of sales over the course of the past few quarters, including the darker days of late 2020 and early 2021. Business written, in some ways, is more of a leading indicator. During the month of July, we wrote 7% more business for third and fourth quarter than we wrote for the same periods in July 2019. While it is just one month, This is the first month since the pandemic in which that has occurred and a positive harbinger for the future. We've also seen improvement in a number of categories that were severely disrupted by the pandemic. On the other hand, the recovery is being constrained by the widely reported disruptions in supply chains and labor shortages that have impacted a number of our customers, including auto, our largest category. We expect these disruptions to resolve themselves later in the year, which should generate a meaningful lift in revenues as dormant clients ramp up their advertising. although we remain wary of the rising tide of Delta variant infections and their potential impact on the recovery. We are also encouraged by the acceleration in our digital revenues during the second quarter as we posted strong increases in all three primary areas of our digital business, including podcasting, digital audio, and digital marketing solutions. You may recall that our podcasting business had a softer Q1 due to our parting ways with one of our two largest partners, Pushkin Industries, at the end of 2020, and a lighter calendar of new show offerings. That dragged our overall Q1 digital growth down, but we noted on our previous call that we expected podcasting to rebound in Q2, despite the loss of Pushkin, based upon the strong underlying growth in our podcasting business at both Cadence 13 and Pineapple Street Studios. And in fact, we exceeded our own expectations and our guidance with digital revenues growing 41% year-over-year and 17% sequentially from Q1. Digital represented 20% of our revenues during the first half of the year, double its contribution in 2019. And we are posting very healthy growth in our various digital performance drivers. Streaming MAUs jumped 24% versus last year. Our overall streaming TLH was up 9% versus last year, led by smart speaker growth up 31%. Streaming RPMs were up 67% over prior year, And podcast RPMs were even stronger, up 93%. And looking ahead, we are very excited by the latest enhancement to our Odyssey digital platforms as we continue to drive increases in audience and total listening hours. At the end of June, we launched over 350 exclusive new digital stations on our Odyssey platform. Most of these stations, unlike many of our competitors who focus on algorithmically driven playlists, are curated by our top programmers, personalities, and a number of A-list stars such as Chris Martin, Tiesto, Jake Owen, Sophia Carson, and more to come. We are also pleased to have Coca-Cola, Macy's, and Geico sign on as our launch partners on this important enhancement to our Odyssey digital platform. Our sports betting business is also growing at a very rapid pace. We previously said that our sports betting revenue would grow 50% in 2021 and now expect to exceed that number as we continue to expect sports betting to grow into a $100 million category for us in a few years as legalized sports betting continues to spread across the country. We made a handful of important strategic moves during the quarter to bolster our opportunities. We announced a partnership with Major League Baseball, making Odyssey their official podcasting and digital audio partner. The deal includes a number of elements, including the exclusive sales rights to MLB's digital audio and exclusive use of both live and archived MLB games and other audio. In addition, we continue to expand our betting platform. During the quarter, we announced the launch of the BetQL Network, featuring live sports betting content throughout the day and evening, distributed across the country on select radio affiliates, as well as universally on the Odyssey digital platform. It was also a strong quarter for development in our podcast studios. We announced a multi-year strategic partnership with American Public Media, the creators of Marketplace and other prestigious podcast programming. Under the agreement, which launched on July 1, Odyssey will be the exclusive podcast sales representative for APM, And in addition, we will jointly develop future on-demand programming initiatives, co-productions, and collaborative new revenue opportunities. We also launched Shining City Audio, a new podcast studio joint venture with Pulitzer Prize-winning author and historian John Meacham. Other major releases and announcements include One Click, narrated by Elle Fanning, Gangster Capitalism Season 3, focusing on Jerry Falwell Jr. and Liberty University, a second season of the blockbuster Blackjack, to Live and Die in L.A. in partnership with Tenderfoot, 70 Over 70, the highly acclaimed new series created and hosted by our own Max Linsky, What's in Your Glass with Carmelo Anthony, The 11th, the new monthly magazine show, and Tell Me with Ellen Pompeo, among numerous others. We now reach one in four podcast listeners in the U.S., according to the Edison Infinite Dial projected number of monthly podcast listeners. And just this week, HBO Max announced an expansion of our existing Odyssey podcasting partnership to include additional HBO Max and HBO documentary titles. Also last week, we launched PodSauce, our new audio-video podcast discovery show with Macy's as our launch partner. And I want to mention that our newest acquisition, Podcorn, the podcast influencer marketplace, had a strong first quarter as part of the Odyssey group and is now closing in on 50,000 podcasters on its platforms. One last podcasting note, we announced the launch of 2400 Sports, our new dedicated sports podcast studio, building on our leadership position in sports audio. Our new strategic partnership with MLB, making us their official podcast partner, will obviously be an important cornerstone of the new studio's properties. And we announced a related development deal with award-winning podcast producer Jody Avergan, whose prior credits include ESPN's 30 for 30 and podcast projects with WNYC, Apple, and audible. Turning to events, we are announcing the resumption of a select number of our primary events beginning in September next month. While we will not be back to 2019 levels this year, it is great to be back with live shows and live audiences featuring a number of the country's top artists. And finally, radio ratings continue to recover as social mobility has accelerated and should receive a further boost as a greater portion of the population returns to their workplaces after Labor Day. The latest Nielsen data shows radio audience reach back to 98% of its March 2020 levels. In addition, it is interesting to note that radio now has a 76% share of all ad-supported audio listening in the U.S., led by an 87% share of ad-supported listening in cars. This data from the spring 2021 Edison Research share of Ear Study once again demonstrates the resilient strength of broadcast radio in reaching and engaging the American public at scale. As disruption accelerates across other media platforms, radio and audio stand to benefit, and Odyssey is well positioned to participate with our scaled premium multi-platform content. In sum, it was a strong quarter of strategic progress and pandemic recovery across our company as we continue to build, transform, and meaningfully enhance the organization. Odyssey is rapidly emerging as a leading competitor in virtually all areas of the dynamic audio business, distinguished by the premium nature of our exclusive content and well-positioned for the future. We continue to drive improvements in our business model while investing in new content, products, data, technology, and talented leadership. We are emerging from the pandemic as a meaningfully stronger and better positioned company with enhanced growth potential, building on our core strengths and capabilities and our unique asset mix. We are excited by what lies ahead. And with that, I'll turn it over to Rich.