Workflow
Lee Enterprises(LEE) - 2024 Q4 - Earnings Call Transcript
LEELee Enterprises(LEE)2024-12-12 16:46
Filings

Financial Data and Key Metrics Changes - In Q4 2024, digital revenues surpassed print revenues, reaching 51% of total revenue, a 7-point improvement year-over-year [8] - Digital subscription revenue grew by 41% on a same-store basis, with total digital revenue approaching 300millionforthefiscalyear,representinga17300 million for the fiscal year, representing a 17% annual growth rate over the last three years [9][12] - The digital margin stands at 72%, indicating high profitability in the digital business [18] Business Line Data and Key Metrics Changes - The digital marketing services business, Amplify Digital Agency, grew 11% for the fiscal year and 21% in Q4 on a same-store basis, nearing 100 million in annual revenue [9] - Digital subscription units reached 771,000, with a target of 1.2 million digital-only subscribers by 2028 [11] Market Data and Key Metrics Changes - Lee Enterprises has outpaced the industry in key digital categories, with digital subscription revenue renewal increasing by 46% annually over the last three years [10] - The company expects total digital revenue to grow between 7% to 10% in 2025 [21] Company Strategy and Development Direction - The company is focused on becoming a digital-first entity, leveraging AI partnerships to enhance content and advertising capabilities [7][22] - Lee's three-pillar growth strategy aims for total digital revenue exceeding 450millionby2028,drivenbyAmplifyDigitalAgencygrowth,digitalsubscriptions,andnewAIrevenueopportunities[19]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementhighlightedasignificantshiftinconsumerbehaviortowardsAI−poweredsearchengines,predictingadeclineintraditionalsearchusage[23]−Thecompanyisoptimisticaboutthefuture,citingpartnershipswithleadingAIplatformsasameanstoenhanceuserengagementandadvertisingopportunities[31][32]OtherImportantInformation−Thecompanyhasidentified450 million by 2028, driven by Amplify Digital Agency growth, digital subscriptions, and new AI revenue opportunities [19] Management's Comments on Operating Environment and Future Outlook - Management highlighted a significant shift in consumer behavior towards AI-powered search engines, predicting a decline in traditional search usage [23] - The company is optimistic about the future, citing partnerships with leading AI platforms as a means to enhance user engagement and advertising opportunities [31][32] Other Important Information - The company has identified 25 million in additional non-core assets for monetization, contributing to debt reduction efforts [16] - Lee Enterprises has a favorable credit agreement with Berkshire, allowing for strategic focus without financial performance covenants [15] Q&A Session Summary Question: Future savings and investments from AI partnerships - Management indicated that partnerships provide access to AI technology without changing the level of investment, enhancing confidence in long-term growth targets [44][45] Question: Digital subscription numbers - The current digital subscription count is 771,000 [48] Question: Profitability of print revenue - Print revenue remains profitable on an operating basis but is on a declining trend due to secular changes [51]