Lee Enterprises(LEE) - 2025 Q2 - Quarterly Results

Financial Highlights and Management Commentary Lee Enterprises reported $73 million in digital revenue (53% of total), with digital-only subscriptions up 20% YoY, despite a $2 million cybersecurity incident - Digital transformation continues with digital-only subscription revenue up 20% YoY (same-store) and Amplified Digital Agency revenue up 9% YoY (same-store)[1] - A February cybersecurity incident incurred $2 million in restoration costs and negatively impacted advertising revenue and digital subscriber growth[1] - The company launched an AI Enablement solution for local businesses in March 2025 to prepare them for the AI transformation of advertising[2] - Executed $40 million in annualized cost reductions to improve free cash flow in the second half of FY25[3] Q2 FY2025 Key Metrics | Metric | Value | | :--- | :--- | | Total Operating Revenue | $137 million | | Total Digital Revenue | $73 million (53% of total) | | Digital-Only Subscription Revenue | $24 million (+17% YoY) | | Digital-Only Subscribers | 728,000 | | Net Loss | $12 million | | Adjusted EBITDA | $8 million | Financial Condition As of March 30, 2025, Lee Enterprises reported $453 million in debt and $5 million in cash, with its lender waiving interest payments to enhance short-term liquidity Debt and Liquidity as of March 30, 2025 | Metric | Value | | :--- | :--- | | Principal Debt Outstanding | $453 million | | Cash on Balance Sheet | $5 million | | Net Debt | $448 million | | FY25 Expected CapEx | Up to $7 million | - The company's sole lender, BH Finance, waived March and April 2025 interest and rent payments to provide short-term liquidity, with the waived amounts added to the principal balance[6] Financial Statements This section presents the company's consolidated financial performance, detailing revenue, expenses, net loss, and the evolving digital-to-print revenue mix Consolidated Statements of Operations Lee Enterprises reported $137.4 million in total operating revenue for Q2 2025, a decrease from the prior year, resulting in a net loss of $12.0 million Q2 FY2025 vs Q2 FY2024 Statement of Operations (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Operating Revenue | $137,380 | $146,550 | | Total Operating Expenses | $143,038 | $152,308 | | Operating Loss | ($4,503) | ($4,552) | | Net Loss | ($12,015) | ($11,636) | | Loss Per Share (Basic) | ($2.07) | ($2.06) | Digital / Print Revenue Composition Digital revenue increased to $72.6 million in Q2 2025, now comprising 53% of total operating revenue, while print revenue declined significantly Q2 Revenue Composition (in thousands) | Revenue Stream | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Digital Revenue | $72,556 | $70,773 | +2.5% | | Total Print Revenue | $64,824 | $75,777 | -14.5% | | Total Operating Revenue | $137,380 | $146,550 | -6.3% | - Digital Only Subscription Revenue was a key growth driver, increasing 17.4% to $23.8 million from $20.3 million YoY[14] Reconciliation of Non-GAAP Financial Measures This section provides reconciliations for key non-GAAP financial metrics, including Adjusted EBITDA, Cash Costs, and Same-store Revenues, to GAAP measures Reconciliation of Adjusted EBITDA and Cash Costs Adjusted EBITDA for Q2 2025 significantly decreased to $7.8 million from $15.1 million YoY, while Cash Costs slightly decreased to $131.2 million Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Loss | ($12,015) | ($11,636) | | Adjusted EBITDA | $7,768 | $15,061 | Cash Costs Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating Expenses | $143,038 | $152,308 | | Cash Costs | $131,225 | $133,259 | Reconciliation of Same-store Revenues Same-store total operating revenue decreased 5.3% to $137.4 million, while same-store Digital Subscription Revenue grew strongly by 19.7% Same-Store Revenue Growth (in thousands) | Revenue Stream (Same-Store) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Digital Subscription Revenue | $23,789 | $19,880 | +19.7% | | Digital Advertising Revenue | $43,938 | $45,050 | -2.5% | | Total Operating Revenue | $137,357 | $144,966 | -5.3% | Company Information and Disclosures This section outlines Lee Enterprises' business as a subscription and advertising platform, details forward-looking statement risks, and defines key non-GAAP financial measures - Lee Enterprises is a subscription and advertising platform and a leading provider of local news, serving 72 markets in 25 states[8] - The report contains forward-looking statements subject to risks including declining print revenue, cybersecurity breaches, and changes in advertising demand[9][12] - Non-GAAP measures like Adjusted EBITDA and Cash Costs are used by management to assess operating performance by excluding unusual, infrequent or non-cash items[17]