Gannett Co., Inc.

Greetings. Welcome to the Gannett Company Q2 2025 earnings call. At this time, all participants are in a 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. Please note this conference is being recorded. I will now like to turn the conference over to your host, Matt Esposito, head of investor relations. You may begin.

Thank you. Good morning, everyone, and thank you for joining our call today to discuss Gannett's second quarter 2025 financial results. Presenting on today's call will be Mike Reed, chairman and chief executive officer, Tricia Gasser, chief financial officer, and Kristen Roberts, president of Gannett Media. 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'll be referencing it today on the call as it provides you with additional detail on this quarter's performance and our full year 2025 business outlook. 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 as defined under the U.S. federal security laws, 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 filing made in the Securities and Exchange Commission. Except as required by law, we undertake no obligation to publicly update or correct any of the forward-looking statements made during this call. Please keep in mind all comparisons are on a -over-year basis unless otherwise noted. In addition, we will be discussing non-GAAP financial information during the call, including same store revenues, free cash flow, total 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 offer to purchase any Gannett securities. The webcasts and audiocasts are copyrighted material of Gannett and may not be duplicated, reproduced, or rebroadcasted without our prior written consent. With that, I would like to turn the call over to Mike Reed, Gannett's Chairman and CEO.

Thank you, Matt. Good morning, everyone. The second quarter reflects continued progress across most all facets of our strategy. During the call this morning, you'll hear a lot about the sequential improvements in our financial results from the first quarter to the second quarter. As we mentioned last quarter, 2025 will unfold as a year of two halves, and we are now beginning to see that shift take place. While the first half of the year didn't fully meet our expectations, momentum is building across key areas of the business. And you'll hear today about the operational and strategic initiatives that are improving our current trends and positioning us for stronger performance in the second half of the year. Stronger performance will also be driven by our recently announced $100 million cost reduction program and the Strategic AI Content Licensing Agreement we announced yesterday with Perplexity. Tricia will walk through details later in the call, but a few key highlights I want to address up front this morning that we expect in the second half of the year. Those include same store digital revenue growth between 3 and 5% year over year, meaningful total adjusted EBITDA growth compared to the prior year, and free cash flow growth of over 100% versus the prior year. We are seeing our key financial metrics move in the right direction. We saw that in Q2, and I'll run through a few of those in a second. We are also seeing that momentum and improvement carry into the third quarter, which we believe positions us well for the back half of the year. Looking at Q2, we drove sequential improvement across our key financial metrics. These include total adjusted EBITDA of $64.2 million, reflecting a sequential increase of 27%. We generated $17.6 million in free cash flow, representing sequential growth of 73%. We repaid $23.4 million of debt in the second quarter, and for the first six months we have repaid close to $100 million of debt. Same store revenue trends also improved sequentially, driven by momentum across our digital portfolio. Three of our four digital revenue categories posted sequential growth, and our overall digital revenue performance strengthened as the quarter progressed. Separately, digital advertising revenues grew 4% year over year, as compared to being down slightly in the first quarter. Realizing these improvements in the second half of the year is critical to our ongoing transformation, and we believe our progress and current trends position us to accomplish this. Further, in the third quarter, we began implementing a cost reduction program targeting approximately $100 million in annualized expense reductions. And as a result, we expect total adjusted EBITDA to grow for the full year of 2025 over 2024, with meaningful growth in the back half of the year. And we believe this cost reduction program positions us to deliver solid total adjusted EBITDA growth again in 2026, and will lead to continued expansion of adjusted EBITDA margins. We expect the majority of these efficiencies will be implemented by the end of the third quarter, with a small portion expected to carry into the fourth quarter. These actions are targeted near term and are already in motion, which, along with the green shoots across our digital portfolio that we are seeing, reinforce our confidence to drive much stronger performance in the second half of the year. Now let's turn to some key operational highlights from the second quarter. Our diversified digital revenue strategy is rooted in having an audience at scale with improving engagement in order to provide a foundation for sustainable growth. In the second quarter, which marked the first quarter, the audience from the Austin American Statesman was excluded. We maintained our position as one of the leading news and information providers among content creators, with 181 million average monthly unique visitors coming to our platform. This underscores the continued strength of our overall reach. We also improved our engagement with that audience, evidenced by another quarter of page view growth compared to the prior year. We believe our heightened focus on monetizing the full spectrum of our audience through personalized experiences and diverse revenue streams positions us to drive meaningful improvement across our digital portfolio. A clear example of this progress is our digital advertising business, which returned to year over year growth in the second quarter. We consistently seen how scaled audience growth and increased engagement directly drive programmatic yield and revenue. However, the more meaningful upside lies in our ability to convert that audience into premium, high CPM direct campaigns that align with advertiser objectives. We believe we will continue to benefit from the stability we are seeing across the broader advertising marketplace, and that our growth will accelerate as we further leverage the strength of the USA Today brand and the reach of our national sales organization. We believe publishers in general, but USA Today network in particular, provide an attractive brand safe platform. And as a result, we see significant potential to unlock additional demand for large marketing budgets. Turning to our digital only subscription business, the last six months have been a reset. Hard, but healthy. As we've evaluated the data on churn, we made the decision to stop acquisition that delivered volume without long term subscriber value. We have calibrated our focus on high value subscribers and are prioritizing our food and sustainable growth. That means some pain in the short term, but this is an intentional necessary shift that is already starting to show positive signs of improvement. Our local subscriptions continue to be our highest ARPU group, and we are doubling down on this core, where we have a differentiated product, strong brand trust, and significant pricing power. Last year, we largely priced across the board. This year, we're localizing our approach, raising prices in markets with higher engagement and being flexible where needed. It's not a one size fit all, and we're getting more sophisticated in our approach. As we grow this business, we will continue to calibrate our focus on volume and profitability over the long term. We remain committed to growing digital only subscriptions, but we are building our subscriber base with intention. This is important as we are seeing positive traction from this approach as digital only ARPU increased both sequentially and year over year. We believe there is continued upside in ARPU, and we expect sequential improvement in digital only subscription revenue for both the third quarter and the fourth quarter as we continue to build our base of loyal core subscribers. With that, I'll turn the call over to Kristin to outline some of the strategic initiatives in motion for GANET Media during the second half of the year.