Gannett(GCI) - 2025 Q2 - Quarterly Results

Gannett Announces Second Quarter 2025 Results and Outlook CEO Commentary CEO highlighted sequential Q2 2025 financial improvements, digital ad growth, $100M cost cuts, debt repayment, and AI traction - Sequential improvement across key financial metrics: Total Adjusted EBITDA margin expanded to 11% from ~9%, net income attributable to Gannett, cash provided by operating activities, free cash flow, and cash balance[2] - Digital advertising trends improved from a decline in Q1 to a 4% increase in Q2, with further improvement expected in Q3[2] - Implementing targeted annualized expense reductions of approximately $100 million to create a lower, more variable cost structure and increase margins[3] - Repaid $23.4 million of debt in Q2 2025, totaling approximately $100 million in H1 2025, and expects to exceed initial projections by repaying over $135 million by year-end 2025[3] - Seeing meaningful traction in AI initiatives, including a licensing deal with Perplexity, launching Taboola's generative AI answer engine 'DeeperDive' on USA TODAY, and utilizing technology to block unauthorized AI scraping[3] Second Quarter 2025 Financial and Operational Highlights Financial Highlights Gannett reported Q2 2025 total revenues of $584.9 million (down 8.6% YoY), with significant net income and Adjusted EBITDA margin expansion Q2 2025 Key Financial Metrics | Metric | Value (in millions) | | :-------------------------------- | :------------------ | | Total revenues | $584.9 | | Same store revenues | - | | Net income attributable to Gannett | $78.4 | | Adjusted net income attributable to Gannett | $84.5 | | Total Adjusted EBITDA | $64.2 | | Total Adjusted EBITDA margin | 11.0% | | Cash provided by operating activities | $32.6 | | Free cash flow | $17.6 | Digital Highlights Gannett's Q2 2025 digital operations reported 181 million unique visitors, $265.4 million total digital revenues, and sequential improvements in DMS metrics - 181 million average monthly unique visitors, with approximately 129 million from U.S. media network (USA TODAY) and 52 million from U.K. digital properties[5] Q2 2025 Digital Revenue Breakdown | Metric | Value (in millions) | | :------------------------------------ | :------------------ | | Total digital revenues | $265.4 | | Digital advertising revenues | $87.9 | | Digital-only subscription revenues | $42.7 | | Digital Marketing Solutions segment core platform revenues | $116.9 | - Key metrics for Digital Marketing Solutions segment, including core platform revenues, Segment Adjusted EBITDA, core platform average revenue per user, and core platform average customer count, improved sequentially[10] Capital Structure Highlights As of June 30, 2025, Gannett held $88.5 million cash, $1,014.9 million total principal debt, a 2.7x first lien net leverage, and repaid $23.4 million debt in Q2 Capital Structure as of June 30, 2025 | Metric | Value (in millions) | | :-------------------------------- | :------------------ | | Cash and cash equivalents | $88.5 | | Total principal debt outstanding | $1,014.9 | | First lien debt | $767.1 | | First lien net leverage | 2.7x | | Debt repaid in Q2 2025 | $23.4 | - Received a waiver from certain lenders of its $900 million five-year first lien term loan facility and repurchased $14.0 million of principal of its 6% Senior Secured Convertible Notes due 2027 for $15.0 million in cash, financed by a delayed draw term loan[10] Business Outlook Second Half 2025 Business Outlook Gannett projects H2 2025 total digital revenues to grow 3%-5% (same-store), total revenues to decline low single digits, and significant YoY growth in Adjusted EBITDA and cash flows Second Half 2025 Business Outlook (YoY Growth) | Metric | Expected Growth | | :-------------------------------- | :-------------- | | Total digital revenues (same store) | ~3%-5% | | Total revenues (same store) | Low single digits decline | | Net income attributable to Gannett | Decline | | Total Adjusted EBITDA | Growth | | Cash provided by operating activities | >70% Growth | | Free cash flow | >100% Growth | Full Year 2025 Business Outlook Gannett's FY2025 outlook projects flat same-store digital revenues (over 50% of total by 2026), low-mid single-digit total revenue decline, and improved net income, Adjusted EBITDA, and strong cash flow growth Full Year 2025 Business Outlook (YoY Growth) | Metric | Expected Growth | | :-------------------------------- | :-------------- | | Total digital revenues (same store) | Flat | | Total revenues (same store) | Low-mid single digits decline | | Net income attributable to Gannett | Improvement | | Total Adjusted EBITDA | Growth | | Cash provided by operating activities | >30% Growth | | Free cash flow | >30% Growth | - Total digital revenues are expected to make up 50%+ of total revenues during 2026[10] - Total revenues are expected to be down in the low-mid single digits on a same store basis leading to flat same store revenue trends in early 2026[10] Company Information Earnings Conference Call Management hosted an earnings conference call on July 31, 2025, at 8:30 A.M. ET to discuss Q2 results, with webcast and replay details available About Gannett Gannett (NYSE: GCI) is a diversified media company empowering communities through journalism, local content, and digital experiences via USA TODAY NETWORK, Newsquest, and LocaliQ - Gannett Co., Inc. (NYSE: GCI) is a diversified media company with national and local reach, focused on empowering and enriching communities[13] - Key brands include the USA TODAY NETWORK (USA TODAY and local media organizations in the U.S.) and Newsquest (wholly-owned subsidiary in the U.K.)[13] - LocaliQ, its digital marketing solutions brand, supports small and medium-sized businesses with innovative digital marketing products and solutions[13] Cautionary Statement Regarding Forward-Looking Statements This section warns that the press release contains forward-looking statements, subject to risks and uncertainties, and advises readers to consult SEC filings for detailed risk factors - The press release contains forward-looking statements regarding business outlook, digital revenue growth, debt repayment, cost reductions, AI initiatives, and financial performance[14] - These statements are based on current expectations and beliefs, subject to risks and uncertainties that could cause actual results to differ materially[16] - Readers should not place undue reliance on forward-looking statements and should refer to the Company's SEC filings (10-K, 10-Q) for detailed risk factors[16] Financial Statements Condensed Consolidated Balance Sheets As of June 30, 2025, Gannett's total assets were $2,010.2 million (slight decrease), total liabilities $1,773.6 million (decrease), and total equity $236.6 million (significant increase) Condensed Consolidated Balance Sheets (Selected Items, in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :-------------- | :---------------- | :----- | | Cash and cash equivalents | $88,542 | $106,299 | $(17,757) | | Total current assets | $392,840 | $425,895 | $(33,055) | | Total assets | $2,010,187 | $2,040,147 | $(29,960) | | Total current liabilities | $540,953 | $545,602 | $(4,649) | | Long-term debt | $681,352 | $755,754 | $(74,402) | | Convertible debt | $238,219 | $249,757 | $(11,538) | | Total liabilities | $1,773,598 | $1,887,513 | $(113,915) | | Total equity | $236,589 | $152,634 | $83,955 | Condensed Consolidated Statements of Operations Q2 2025 total revenues were $584.9 million (down YoY), with a $78.4 million net income (up significantly YoY) and diluted EPS of $0.42 Condensed Consolidated Statements of Operations (Selected Items, in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------------------- | :------ | :------ | :------- | | Digital revenues | $265,435 | $278,378 | (4.6)% | | Print and commercial revenues | $319,426 | $361,462 | (11.6)% | | Total revenues | $584,861 | $639,840 | (8.6)% | | Operating costs | $359,448 | $391,474 | (8.3)% | | Selling, general and administrative expenses | $164,097 | $177,906 | (7.7)% | | Loss before income taxes | $(9,074) | $(13,086) | 30.6% | | Benefit for income taxes | $(87,472) | $(26,803) | 226.3% | | Net income attributable to Gannett | $78,391 | $13,748 | 470.2% | | Diluted EPS | $0.42 | $0.09 | 366.7% | Condensed Consolidated Statements of Cash Flows H1 2025 operating cash flow was $55.9 million (slight decrease), investing activities generated $27.8 million (significant improvement), and financing activities used $102.2 million due to higher debt repayments Condensed Consolidated Statements of Cash Flows (Selected Items, in thousands) | Metric | H1 2025 | H1 2024 | Change | | :-------------------------------- | :------ | :------ | :----- | | Net income (loss) | $71,065 | $(71,051) | $142,116 | | Cash provided by operating activities | $55,863 | $57,576 | $(1,713) | | Cash provided by (used for) investing activities | $27,804 | $(16,266) | $44,070 | | Cash used for financing activities | $(102,163) | $(43,524) | $(58,639) | | Decrease in cash, cash equivalents and restricted cash | $(20,016) | $(1,818) | $(18,198) | | Cash, cash equivalents and restricted cash at end of period | $96,165 | $108,794 | $(12,629) | - Proceeds from sale of real estate and other assets significantly increased to $50.2 million in H1 2025 from $6.1 million in H1 2024[20] - Repayments of long-term debt increased to $97.9 million in H1 2025 from $39.6 million in H1 2024[20] Segment Information In Q2 2025, Domestic Gannett Media revenues decreased to $439.3 million with declining EBITDA, Newsquest revenues were stable at $61.3 million with increased EBITDA, and DMS revenues slightly decreased to $117.5 million Segment Revenues and Adjusted EBITDA (Q2 2025 vs. Q2 2024, in thousands) | Segment | Q2 2025 Revenues | Q2 2024 Revenues | % Change Revenues | Q2 2025 Adj. EBITDA | Q2 2024 Adj. EBITDA | % Change Adj. EBITDA | | :------------------------ | :--------------- | :--------------- | :---------------- | :------------------ | :------------------ | :------------------- | | Domestic Gannett Media | $439,299 | $491,909 | (10.7)% | $43,224 | $52,898 | (18.3)% | | Newsquest | $61,318 | $61,252 | 0.1% | $14,894 | $14,138 | 5.3% | | Digital Marketing Solutions | $117,478 | $123,798 | (5.1)% | $11,498 | $11,773 | (2.3)% | Segment Adjusted EBITDA Margin (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 Margin | Q2 2024 Margin | Change (bps) | | :------------------------ | :------------- | :------------- | :----------- | | Domestic Gannett Media | 9.8% | 10.8% | (100) | | Newsquest | 24.3% | 23.1% | 120 | | Digital Marketing Solutions | 9.8% | 9.5% | 30 | Non-GAAP Financial Information Use of Non-GAAP Information Gannett uses non-GAAP measures (Adjusted EBITDA, net income, free cash flow, same-store revenues) to supplement GAAP, acknowledging their limitations and non-comparability to other companies' metrics - Non-GAAP measures (Total Adjusted EBITDA, Adjusted net income, Free cash flow, Same store revenues) are used to supplement GAAP information, providing insight into day-to-day performance and core expenses[22][23] - These measures are not GAAP and should not be considered in isolation or as alternatives to GAAP measures; they have limitations, such as excluding cash interest, income tax, and asset impairment charges[25][27] - The company does not reconcile forward-looking non-GAAP measures to GAAP due to unreasonable efforts required for estimation and quantification of future GAAP components[28] Total Adjusted EBITDA and Net Income Reconciliation Q2 2025 Total Adjusted EBITDA was $64.2 million (down YoY) with an 11.0% margin, while net income attributable to Gannett significantly increased to $78.4 million Total Adjusted EBITDA and Net Income Reconciliation (Q2 2025 vs. Q2 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------------------- | :------ | :------ | :------- | | Segment Adjusted EBITDA | $69,616 | $78,809 | (11.7)% | | Corporate | $(5,379) | $(4,278) | (25.7)% | | Total Adjusted EBITDA | $64,237 | $74,531 | (13.8)% | | Net income attributable to Gannett | $78,391 | $13,748 | 470.2% | | Net income attributable to Gannett margin | 13.4% | 2.1% | +1130 bps | | Total Adjusted EBITDA margin | 11.0% | 11.6% | (60) bps | Adjusted Net Income Attributable to Gannett Reconciliation Q2 2025 Adjusted net income attributable to Gannett was $84.5 million, a substantial increase from $29.1 million in Q2 2024, reflecting adjustments for debt extinguishment, reorganization, and asset impairments Adjusted Net Income Attributable to Gannett Reconciliation (Q2 2025 vs. Q2 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------------------- | :------ | :------ | :------- | | Net income attributable to Gannett | $78,391 | $13,748 | 470.2% | | Loss on early extinguishment of debt | $183 | $87 | 110.3% | | Integration and reorganization costs | $12,318 | $19,775 | (37.7)% | | Third-party debt expenses and acquisition costs | $1,165 | $248 | 370.0% | | Asset impairments | $181 | $0 | - | | (Gain) loss on sale or disposal of assets, net | $(1,584) | $236 | (771.2)% | | Other items | $(4,137) | $7 | (59,199.9)% | | Tax impact of above items | $(2,055) | $(4,972) | 58.7% | | Adjusted net income attributable to Gannett | $84,462 | $29,129 | 190.0% | Free Cash Flow Reconciliation Q2 2025 free cash flow was $17.6 million, a decrease from $25.4 million in Q2 2024, primarily due to increased capital expenditures of $15.1 million Free Cash Flow Reconciliation (Q2 2025 vs. Q2 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------------------- | :------ | :------ | :------- | | Cash provided by operating activities (GAAP) | $32,555 | $35,125 | (7.3)% | | Capital expenditures | $(15,058) | $(9,726) | (54.8)% | | Third-party debt expenses | $99 | $0 | - | | Free cash flow (non-GAAP) | $17,596 | $25,399 | (30.7)% | - Free cash flow was negatively impacted by interest paid ($32.2M in Q2 2025 vs $32.1M in Q2 2024), integration and reorganization costs ($7.9M vs $10.3M), and other costs ($3.3M vs $3.8M)[31] Same Store Revenues Reconciliation Q2 2025 total same-store revenues decreased 6.4% to $579.3 million (improved from Q1), while digital same-store revenues decreased 2.8% to $262.1 million Same Store Total Revenues Reconciliation (Q2 2025 vs. Q2 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :------ | :------ | :------- | | Total revenues | $584,861 | $639,840 | (8.6)% | | Currency impact | $(3,113) | $0 | - | | Exited operations | $(2,478) | $(20,690) | 88.0% | | Same store total revenues | $579,270 | $619,150 | (6.4)% | Same Store Digital Revenues Reconciliation (Q2 2025 vs. Q2 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :------ | :------ | :------- | | Digital revenues | $265,435 | $278,378 | (4.6)% | | Currency impact | $(877) | $0 | - | | Exited operations | $(2,478) | $(8,732) | 71.7% | | Same store digital revenues | $262,080 | $269,646 | (2.8)% | Key Performance Indicators (KPIs) KPI Definitions KPIs are quantifiable metrics used by Gannett to gauge strategic, financial, and operational achievements, including definitions for Digital-only ARPU and Core platform ARPU - KPIs are quantifiable measurements used to gauge performance and track trends across segments[33][35] - Digital-only ARPU = digital-only subscription average monthly revenues / average digital-only paid subscriptions[34] - Core platform ARPU = core platform average monthly revenues / average monthly customer count; core platform revenues are from proprietary digital marketing services platform[34] KPI Data Q2 2025 Digital-only ARPU increased 2% to $7.79, but subscriptions decreased 15% to 1,723 thousand; DMS core platform revenues decreased 5% to $116.9 million, with ARPU up 2% Key Performance Indicators (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | % Change | | :-------------------------------- | :------ | :------ | :----- | :------- | | Digital-only ARPU: | | | | | | Domestic Gannett Media | $7.92 | $7.70 | $0.22 | 3% | | Newsquest | $6.01 | $5.94 | $0.07 | 1% | | Total Gannett | $7.79 | $7.62 | $0.17 | 2% | | DMS: | | | | | | Core platform revenues (in thousands) | $116,927 | $122,843 | $(5,916) | (5)% | | Core platform ARPU | $2,830 | $2,777 | $53 | 2% | | Core platform average customer count (in thousands) | 13.8 | 14.7 | (0.9) | (6)% | | Digital-only paid subscriptions (in thousands): | | | | | | Domestic Gannett Media | 1,597 | 1,938 | (341) | (18)% | | Newsquest | 126 | 96 | 30 | 31% | | Total Gannett | 1,723 | 2,034 | (311) | (15)% |