Gannett Co., Inc.

Good day, ladies and gentlemen, and welcome to the Gallup third quarter of 2023 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is my pleasure to introduce your host, Mr. Matthew Esposito of Investor Relations. You may go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining our call today to discuss Gannett's third quarter 2023 financial results. Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer, Doug Horn, Chief Financial Officer, Kristen Roberts, Gannett Media Chief Content Officer, and Chris Cho, President of Digital Marketing Solutions. If you navigate to the Gannett website, you will find that we have posted an earnings supplement in addition to our earlier press release. We will be referencing it today on the call as it provides you with additional detail on this quarter's performance. Before we begin, please let me remind you that this call is being recorded. In addition, certain statements made during this call are or may be deemed to be forward-looking statements, including those with respect to future results and events and are based upon current expectations. These statements involve risks and uncertainties that may cause actual results and events to differ materially from those discussed today. We encourage you to read the cautionary statement regarding forward-looking statements in the earnings supplement, as well as the risk factors described in Gannett's filings made with the SEC. Except as required by law, we undertake no obligation to publicly update or correct any of the forward-looking statements made during this call. In addition, we will be discussing non-GAAP financial information during the call, including same-store revenues, free cash flow, adjusted EBITDA, adjusted EBITDA margin, and adjusted net income attributable to Gannett. You can find reconciliations of our non-GAAP measures to the most comparable U.S. GAAP measures in the earnings supplement. Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in Gannett. The webcast and audio cast are copyrighted material of Gannett and may not be duplicated, reproduced, or rebroadcasted without prior written consent. With that, I would like to turn the call over to Mike Reed, Gannett's Chairman and CEO.

Thanks, Matt. Good morning to all of you, and thanks for joining our call this morning. We continued to make progress in the third quarter across our key priorities. We saw solid adjusted EBITDA growth of 15% year over year. We saw further growth in digital revenues, and we meaningfully reduced our debt and leverage. We also grew our audience by 7% year over year on what is already a large base. Within the quarter, we repaid $65 million of debt, which, combined with our adjusted EBITDA growth, reduced our first lien net leverage below two times. We also maintained a strong liquidity position of $109 million at the end of the third quarter. Equally important, digital revenues surpassed 40% of total revenues growing 3% year-over-year on the same store basis, and we expect this trend of growth to continue in Q4. In Q3, we saw audience growth and engagement improve, and we achieved a record high in digital-only subscription ARPU, resulting in ongoing digital-only subscription revenue growth. We continued to grow our DMS business at healthy margins, Since the end of the third quarter, we also announced additional partnerships to further diversify the monetization of our audience. At the core of our future growth lies the mission to expand our audience and maximize meaningful monetization avenues, and we are pleased with the progress made in the third quarter. While we made great strides on our strategic priorities, we must acknowledge the complex economic environment in which we are operating. We believe there are signs that consumers are beginning to feel the cumulative impact of higher interest rates and continued inflation, which has led to an overall reduction in consumer confidence. As a result, the small and medium-sized businesses we serve have become more cautious in their approach to advertising expenditures than we had previously seen. While these headwinds impacted our top-line performance, we still achieved sequential improvement in same-store revenues for the third consecutive quarter. We will remain diligent in our approach to planning, considering what remains an uncertain environment. We have reduced our full-year 2023 outlook, but our view on net income and adjusted EBITDA is not markedly different than the outlook we gave to start the year. We will continue to exercise prudent cost management to drive our expected meaningful full-year growth in adjusted EBITDA. Our digital revenue growth is based on the growth of DMS and maximizing the revenue per user on our media platform. While digital-only subscription revenue growth remains a key element, we are combining it with a focus on overall monetization. We have an impressive, diligent digital audience, and that audience is growing. We are beginning to see positive returns from our investments in content, as evidenced by our large organic audience growing 7% year-over-year to 189 million average monthly unique visitors, of which 138 million of those visitors come from our USA Today network, as measured by Comscore. and $51 million from our UK digital properties. We believe the largest opportunity for revenue and profit growth, along with shareholder value creation, lies in a comprehensive strategy that monetizes that full audience at various stages of their journey with us. This encompasses digital subscription revenue, digital advertising revenue, affiliate and e-commerce revenue, and future product innovations. A singular focus on any one of these revenue streams comes with degradation to the overall opportunity. Therefore, we are focused on a holistic monetization strategy that ensures we maximize the revenue opportunity across the entire spectrum of our audience. The focus in 2023 on the quality of our digital subscriber acquisition strategy continues to show positive results. In the quarter, we saw modest sequential growth in digital only paid subscriptions and substantial growth in digital only subscription ARPU. Q3 actually reflects our highest digital only subscription ARPU to date and is rooted in the highly local and relevant content our teams produce. We believe there is meaningful additional upside for both digital only subscription and ARPU growth. And we anticipate continued digital only subscription revenue growth as we maintain our focus on smarter customer acquisition, in-depth local content, and effective pricing strategies. Another key component to translate audience growth into increased monetization per user is through the creation of additional meaningful revenue streams on our platform. We continue to make strides with partnerships as we are aligning with brands that share our values and are expected to expand our audience. Over the past year, affiliate revenue started to be realized with the implementation of Gambling.com to provide relevant content for sports enthusiasts and Forbes Marketplace for personal finance content. We recently announced two more partnerships with Jack Pocket and Red Ventures that will further expand the monetization opportunities of our growing audience. As the exclusive digital lottery courier of the USA Today Network, Jack Pocket will reach a broad audience across the country and provide a fun and convenient way for the USA Today Network audience to order lottery tickets right from their phones. The Jack Pocket deal leverages the extensive lottery-related content we already produce within a single hub. Additionally, we executed a partnership with Red Ventures. one of the largest independent affiliate marketing companies with brands such as CNET, Bankrate, and The Points Guy. The multi-year venture will help consumers find the best broadband service providers for home and small businesses through original content and Red Ventures patented technology. This initiative is expected to launch in Q4. These partnerships are expected to drive audience growth and engagement along with high margin revenues. We expect the affiliate revenue stream to become a much more significant contributor to overall revenue over the next few years. Before reviewing our local IQ business, I'd like to actually turn the call over now to Kristen Roberts, our Chief Content Officer, who will discuss the exciting momentum we are seeing in our audience growth. Kristen?