Lee Enterprises(LEE) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The total operating revenue for the second quarter was $137 million, showing an improvement in trend from the first quarter despite the impact of a cyber incident [13] - Net loss totaled $12 million in the quarter, and free cash flow was minimal, which included expenses associated with debt even though payments were waived [23] Business Line Data and Key Metrics Changes - Total digital revenue grew 4% year over year on a same-store basis, with digital subscription revenue leading the way at a growth rate of 20% [10][14] - Amplified Digital agency revenue grew 9% year over year, contributing to the overall digital revenue growth [14] Market Data and Key Metrics Changes - Digital subscription revenue has grown 40% annually over the last three years, significantly outpacing the nearest industry competitor [8] - Amplified Digital agency revenue growth has outpaced competitors, growing 18% annually over the past three years [8] Company Strategy and Development Direction - The company is committed to a digital transformation strategy, aiming for $450 million in digital revenue by 2028 [7] - The introduction of a suite of AI products is expected to accelerate digital revenue growth, with the first product, AI enablement, aimed at local businesses [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant disruption caused by a cyber incident but expressed confidence in the company's recovery and ongoing digital transformation efforts [6][7] - The updated outlook reflects improved total digital revenue growth trends in the second half of the fiscal year, with expectations for free cash flow to be positive in that period [20][23] Other Important Information - The company executed approximately $40 million in annualized cost reductions in the second quarter to drive margin improvements [15] - The cyber incident impacted the ability to bill and collect from customers, affecting the balance sheet [16][17] Q&A Session Summary Question: Did the net loss of $12 million in the quarter include the interest deferral? When does the company expect to be free cash flow positive? - The net loss includes expenses associated with debt, even though payments were waived. The company expects to be free cash flow positive in the second half of fiscal year 2025 [23]