iHeartMedia(IHRT) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2025, the company generated adjusted EBITDA of $105 million, flat compared to the prior year, and consolidated revenue increased by 1% year-over-year, exceeding guidance of a low single-digit decline [6][15][20] - The company's net debt was approximately $4.6 billion, with total liquidity of $569 million and a cash balance of $168 million, resulting in a net debt to adjusted EBITDA ratio of 6.5 times [19] Business Line Data and Key Metrics Changes - The Digital Audio Group's revenue was $277 million, up 16% year-over-year, with adjusted EBITDA of $87 million, a 27.8% increase, and adjusted EBITDA margins improved to 31.4% from 28.5% [7][18] - The Multi-Platform Group's revenue was $473 million, down 4.2% year-over-year, with adjusted EBITDA of $70 million, down 9.3% [9][18] - The Audio and Media Services Group's revenue was $59 million, down 14.2% year-over-year, with adjusted EBITDA of $16 million, down 33.3% [19] Market Data and Key Metrics Changes - iHeartMedia's share of advertising revenue in measured markets grew to 40%, indicating a strong position among national advertisers [10][11] - The company reported that the largest gains in advertising revenue came from professional services, tech and telco, beauty and fitness, and education, while declines were seen in restaurants, auto, gambling, and political categories [13] Company Strategy and Development Direction - The company remains committed to leveraging new technologies, including programmatic and AI, to enhance operational efficiency and drive growth [5][11] - The modernization program is on track to generate $150 million in net savings in 2025, primarily through technology and AI [11][15] Management's Comments on Operating Environment and Future Outlook - Management noted generally stable ad spend but emphasized the need to monitor the advertising marketplace closely due to economic uncertainty [5] - The company expects Q2 2025 adjusted EBITDA to be in the range of $140 million to $160 million, with consolidated revenue anticipated to decline low single digits compared to the prior year [20] Other Important Information - Podcast revenue grew by 28% year-over-year, significantly exceeding guidance, and the company is experiencing a flywheel effect in podcast publishing [8][18] - The company has a large sales force of approximately 1,000 people selling podcasts and other products, contributing to its competitive advantage [44] Q&A Session Summary Question: Insights on the ad market and visibility - Management indicated that larger advertisers are maintaining their spending, while small and medium-sized businesses are more affected by economic news [26][30] Question: Market share and terrestrial radio industry - Management expressed confidence in increasing market share beyond 40% due to a strong listener base and ongoing transformation in monetization strategies [30][34] Question: Podcasting growth and competition with video - Management highlighted the strength of their podcast offerings and audience, asserting that podcasting remains distinct from video content [40][42] Question: Cost savings and future opportunities - The $27 million in cost savings for Q1 was not a run rate but an actual impact, with expectations of continued savings throughout the year [52] Question: Nielsen's updated ratings methodology - Management welcomed Nielsen's efforts to capture more accurate listening data, which is crucial for advertising effectiveness [56] Question: Programmatic advertising adoption - Management noted that while programmatic advertising is progressing, it has not yet materially impacted Premier Networks' revenue [60]