DallasNews Incurs Q3 Loss, Widens Y/Y, Shares Up 5%

Core Insights - DallasNews Corporation (DALN) shares increased by 4.8% following the earnings report for the quarter ended September 30, 2024, outperforming the S&P 500 index, which saw a decline of 0.3% during the same period [1] - The company reported a net loss of $3.9 million, or 73 cents per share, which is a significant increase from a net loss of$1.4 million, or 26 cents per share, in the same quarter of the previous year [1] Revenue Performance - Total revenues for the third quarter of 2024 were $31.1 million, reflecting a 9.7$34.5 million in the same quarter of 2023 [2] - The decline in revenue was primarily due to an 18.5% drop in advertising and marketing services revenue, which fell from $14.7 million to$12 million [2] - Circulation revenue experienced a slight decline of 0.8%, totaling $16.1 million compared to$16.2 million in the prior year [2] Other Revenue Streams - Printing, distribution, and other revenue decreased by 14% to $3.1 million, mainly due to reductions in commercial printing and mailed advertisement revenues [3] Operating Metrics - The company incurred an adjusted operating loss of$0.7 million, an improvement from the $0.9 million loss recorded a year ago, attributed to cost-saving measures that reduced adjusted operating expenses by 10$31.9 million [4] - The TDMN segment's adjusted operating income was $4.8 million, slightly down from$5 million in the third quarter of 2023, while the Agency segment reported a modest adjusted operating income of $0.05 million, recovering from a loss of$0.7 million in the previous year [5] Strategic Initiatives - CEO Grant Moise emphasized a strategic shift towards digital growth, implementing an adjusted digital subscription model aimed at reversing the decline in subscription volume, with gradual revenue growth expected from this initiative [6] - The decline in advertising revenues was influenced by the company's decision to phase out its shared mail program and certain print-only niche publications [7] Cost Management - Operating expenses decreased by 2.4% year over year to $35.3 million, aided by a$1.9 million reduction in distribution costs and $1.1 million in savings from newsprint expenses, despite an increase in employee compensation due to a$3 million severance expense related to workforce restructuring [8] Workforce Changes - During the quarter, DallasNews reduced its workforce by 12.2%, bringing the employee count to 534 as of September 30, 2024, as part of a restructuring initiative aimed at streamlining operations and enhancing efficiency [9]