Lee Enterprises(LEE)2022-02-03 19:56Financial Data and Key Metrics Changes - Total operating revenue for Q1 2022 was $202 million, with total digital revenue increasing 17% year-over-year to $55 million [34][35] - Digital-only subscription revenue increased 26% to $8 million, with over 450,000 paid digital-only subscribers, representing a 57% year-over-year growth [35][10] - Total print revenue declined 11% year-over-year to $147 million due to secular declines and supply chain constraints [36] Business Line Data and Key Metrics Changes - Digital advertising and marketing services revenue increased 19% to $43 million, with a 30% increase when excluding political revenue [35] - Amplified Digital Agency revenue grew 69% year-over-year to $15 million, contributing to a total of $47 million over the last 12 months [35][30] - Subscription-based revenue reached $107 million, accounting for 53% of total operating revenue [12] Market Data and Key Metrics Changes - The company serves over 47 million unique visitors monthly, with 12 million loyal readers and 2.4 million highly engaged readers [24] - Video revenue increased by 98% in the quarter, indicating strong growth potential in leveraging trusted brands [20] Company Strategy and Development Direction - The company is focused on a Three Pillar Digital Growth Strategy aimed at expanding digital audiences, growing digital subscriptions, and diversifying offerings for local advertisers [14][18] - The goal is to achieve over $435 million in recurring sustainable digital revenue by 2026 [14] - Investments in talent and technology are being made to support the digital transformation and enhance user experience [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of regional local advertisers, with strong growth in digital advertising [56] - The company anticipates continued digital growth and expects to achieve 495,000 digital-only subscribers and $230 million in total digital revenue for fiscal 2022 [37] - Management highlighted the importance of managing costs while investing in digital growth, expecting a reduction in legacy costs of $20 million to $30 million in fiscal 2022 [39] Other Important Information - The principal amount of debt decreased to $463 million, down $20 million sequentially [43] - The company is targeting $20 million to $30 million in asset sales for fiscal 2022, with $14 million already closed in Q1 [44] Q&A Session Summary Question: What was the digital political advertising number in the prior year quarter? - The prior year had around $3 million of political revenue associated with various campaigns [52] Question: When do you cycle against the changes in the paywall with your digital sites? - Most changes were cycled in the middle of FY22, fairly late in the fiscal year in '21 [54] Question: Can you discuss the tone of the current market, particularly regarding Amplified and print advertising? - The recovery for regional local advertisers is strong, but print advertising recovery is slower due to supply chain issues [56] Question: How important is the auto category for the company? - The auto category is significant, but revenues have declined due to supply chain issues affecting advertising [57] Question: Clarification on the $14 million in closed real estate sales and fiscal 2022 guidance? - The fiscal year '22 guidance of $20 million to $30 million in closed sales includes the $14 million already closed [58] Question: Thoughts on selling or spinning off Amplified or TownNews? - Both Amplified and TownNews are crucial for the digital growth strategy, and their value is better leveraged within the company [63] Question: Status of warrants issued in 2014? - None of the warrants have been exercised as of now, and they are set to expire on March 31, 2022 [64]